By Geoff Percival
Shares in Cuisine de France owner Aryzta slid almost 11% yesterday after it confirmed a plan to tap existing shareholders by way of a rights issue, for €800m to help reduce its debt pile.
With the shares having lost 73% of their value in the past year and the foods company now valued at little over €702m, the latest shares drop brings further misery on investors. Investors will see their shareholdings dilute significantly unless they take part in the rights issue, which it is looking to execute in the final quarter of the year.
Saddled with about €1.6bn in debt, Aryzta has already flagged a €1bn deleveraging plan, which includes €450m in asset disposals. Aryzta which has issued three profit warnings in the past 18 months is due to publish full-year earnings for the 12 months to the end of July on October 1.
However, the €800m rights issue would help “create the necessary strategic and financial flexibility to implement its business plan”, the company said.
“A significantly improved capital structure will provide Aryzta with the means to continue to take the necessary steps to reposition the business and deliver on our strategy,” said chief executive Kevin Toland.
“Over the medium-term, we expect to generate significant cashflow which will be applied towards continued net debt reduction and to resource selective growth opportunities,” he said.
It has guided for earnings of €296m to €304m, down from €420.3m generated the year before. A sale of its 49% stake in French food retailer Picard to help with debt reduction had been expected by analysts before the end of Aryzta’s financial year. However, the group said in its rights issue announcement that the Picard disposal process “remains ongoing”.