Aryzta cost-cutting advisor hired by Australian poultry giant

ISS changes mind on Aryzta and backs €800m capital raise

A key advisor on Swiss-Irish frozen baked goods group Aryzta's multimillion-euro cost-cutting plan has been named as the new chief executive of Australian poultry producer Inghams.

Jim Leighton, who joined Aryzta's board as a non-executive last year and was named last month as a consultant on the group's €200 million three-year cost savings plan, was appointed this week as the new chief executive of Inghams.

Mr Leighton, who is currently based in Colorado, is expected to start his new job in Australia by the year-end after visa formalities have been completed. Sources said, however, that the main part of his cost-cutting consultancy role at Aryzta will be concluded by then.

Meanwhile, it emerged on Friday that investor advisory firm Institutional Shareholder Services (ISS) has reversed its initial advice to Aryzta shareholders to vote down the company’s planned €800 million capital raise, while two other proxy advisors have come out in favour of the plan.


Following discussions with management and the food group's largest shareholder Cobas, which is opposing the deal, ISS said it was now advising investors to support the rights issue, which will be put to a vote at the company's annual general meeting in Zurich next month.

It said that if shareholders reject the current proposal in order to have a vote on an alternative €400 million capital raising plan being proposed by Cobas, implementation might be delayed because of Swiss auditing rules. The Cobas plan was also subject to a high degree of uncertainty, it added.

“Market confidence on Aryzta has worn thin, as evident by its stock price performance; still, market participants[that] ISS spoke to were confident in a recovery in the operating business but not before some turmoil in the interim and a much needed confidence shock, in the form of a significant capital injection,” ISS said.

“Based on the need for a capital raising and the risk-return of the Cobas proposal, a change in vote recommendation to ‘for’ is warranted.”

Fellow shareholder advisory groups Glass Lewis and Ethos have also advised investors to support of the plan, which the Swiss-Irish company says is needed to pay down debt and fund a major restructuring of the group.

Best interests

In its note to shareholders, Glass Lewis said the board and management have presented a compelling argument that the proposed €800 million capital increase was necessary and in the best interests of the company and its shareholders.

“The company faces liquidity concerns and a crisis of confidence among key stakeholder groups, including existing and prospective customers and investors,” it said.

Glass Lewis said the proposed capital increase would provide Aryzta with additional capital to meet near-term debt maturities and comply with debt covenants, while providing sufficient working capital for operations and investment in the restructuring programme.

Glass Lewis also suggested the alternative capital plan proposed by Cobas included a capital raise that was not underwritten and required additional asset disposals, which would involve a greater level of risk and uncertainty.

Aryzta, which makes frozen par-baked bakery products for customers, and owns the Cuisine de France range of consumer products, welcomed the backing of the three proxy advisors.

“The Aryzta board of directors and the executive committee unanimously believe that a capital raise in an amount of €800 million is the financing option and transaction which has the highest probability of success for Aryzta and all stakeholders, including shareholders; and is the only proposal that addresses the critical issue of commercial confidence in the group,” the company said.

The fundraising will dilute Aryzta's earnings per share by about 25 per cent, according to Zuercher Kantonalbank analyst Patrik Schwendimann.

However, it will boost the company’s balance sheet ahead of the planned sale of its frozen food subsidiary Picard, which it bought for €446.6 million in 2015 in a deal that was badly received at the time by investors.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times