Aryzta, the troubled Irish-Swiss baked goods group, has been urged to halve the scale of a planned €800 million rights issue designed to pay down debt and fund the group through a major restructuring of its operations.
Cobas Asset Management, the Spanish group that is Aryzta's largest single shareholder, said on Monday that it is requesting an extraordinary general meeting of shareholders to reduce the money being raised to €400 million.
Cobas owns almost 15 per cent of Aryzta’s voting stock.
The fund manager is also proposing that Aryzta sell €250 million of assets to improve its finances.
In a statement, Cobas said Aryzta’s board had refused to add its proposal to the agenda of the meeting of shareholders already called for November 1st to vote on its €800 million fundraise proposal. That position was confirmed by the company on Monday night. It said there would be no change in the date or agenda for the November 1st meeting.
The Cobas egm will not be required unless shareholders reject the company’s proposal.
Cobas started building up its stake in Aryzta in early 2017, when the stock traded at more than double its current value.
The group, which is led by Spanish investor Francisco Garcia Parames, said if a majority of shareholders "unexpectedly support" the company's €800 million share sale plan, it would buy its share of the rights issue to "emphasise its full support towards Aryzta at all times".
Aryzta, which makes frozen par-baked bakery products for customers, including restaurant group McDonald's as well as the Cuisine de France consumer range, is looking to sell shares to reduce its debt, which ballooned under former chief executive Owen Killian.
Last Thursday it said that its board was unanimous in its view that an €800 million “rights issue” – or share sale to existing investors – was needed to repay €500 million of debt, give it €150 million for restructuring and provide additional working capital.
The fundraise would dilute Aryzta's earnings per share by about 25 per cent, according to Zuercher Kantonalbank analyst Patrik Schwendimann.
Following the Cobas approach Aryzta said its board of directors would “analyse the request and proposal, and publish its position” and the date of the second extraordinary general meeting in due course.
The company said it continued to believe its €800 million plan was the “only proposal that addresses the critical issue of commercial confidence in the group”. – Bloomberg