Aryzta investors lose 90% of stake in business

Hundreds of former IAWS investors effectively locked out of €790m rights issue

Hundreds of long-term shareholders in troubled food group Aryzta have seen their stake in the company decimated after they were effectively locked out of a major rights issue.

The shareholders received notice only yesterday of how to go about claiming their rights. But they were told that in order to hit the noon deadline on Thursday for taking up the shares, they needed to indicate their interest to their intermediary by Monday – the day before the letters arrived.

The investors affected were originally shareholders in listed Irish food group IAWS, which merged in 2009 with Swiss rival Hiestand Holding to form Swiss-Irish group Aryzta.

They appear to have lost out in part because of choices they made at that time. When Aryzta was formed, IAWS shareholders were given a choice. Either they could hold their shares in electronic form and receive information electronically -– i.e. by email – or they could continue to hold their shares in traditional paper form and be contacted by post regarding company events and disbursements.

This latter group were held in what is called a bare trust, which is managed by a trustee called Link, formerly Capita. Link also manages the "dematerialised" shares held in electronic form for other investors.

Shareholders narrowly approved a 10-for-one rights issue at an annual meeting of investors last week as part of a company plan to raise €790 million to try to turn around the ailing business.

The new shares cost one Swiss franc (€0.88) apiece – a fraction of the ChF9.34 at which the shares had been trading before the vote.

However, anyone who failed to subscribe for the shares in a very tight window lost out and will receive no payment for the shares forgone.

Because of the complex, cross-border nature of Aryzta, the tight timeframe for the rights issue, the number of intermediaries involved and the expressed preference of this group of shareholders to be contacted by post, they have effectively run out of time.

That means the stake they held in the business ahead of the rights issue will now be worth only one-tenth of that amount.

It is the latest blow for long-term investors who have already seen the value of their shares in Aryzta slide following a series of profit warnings in recent years.