Aryzta’s dough hunt

Biggest shareholder stays silent as Swiss-Irish food company to press ahead with €800m equity plan.

ARYZTA’S biggest shareholder – Cobas Asset Management – has not publicly endorsed the Swiss-Irish company’s announcement that it will press ahead with plans to raise €800m in equity. The move is an effort to cut its debt, and pay for a restructuring and investment plan designed to get the loss-making group back on track. But Cobas has opposed the plan, arguing that a less dilutive approach that would include more asset sales could be adopted. Cobas controls about 15pc of Aryzta, which owns brands such as Cuisine de France and La Brea, and also makes burger buns for McDonald’s. Aryzta chairman Gary McGann yesterday told shareholders that they should approve the planned €800m capital raise, insisting that not doing so could jeopardise the business. “The board has put forward a detailed, multi-year turnaround plan which is in the best interest of all Aryzta stakeholders,” he said. “The group has an unsustainable capital structure and, in the absence of an €800m capital raise, Aryzta will be unable to fully implement this plan, put the business back on a profitable growth path and rebuild value for all shareholders,” he said. “We are resolute in our belief that an adequately capitalised and properly positioned Aryzta will, in time, be a successful and sustainable business with attractive prospects,” Mr McGann added. A spokesman for Cobas would only refer to the firm’s previous statement, issued at the beginning of the month. Cobas said then that while it agrees in principle with strengthening Aryzta’s balance sheet, it was “reviewing alternatives that will improve upon the company’s proposals”. It said those proposals would be presented to shareholders via the Aryzta board or through an EGM. Cobas, headed by fund manager Francisco Garcia Parames, reportedly wants to cut the planned capital raise to €260m and to get Aryzta to speed up disposals. Aryzta, headed by CEO Kevin Toland, said yesterday that its planned €800m equity raise – of which €500m will be used to repay an existing term loan with the aim of decreasing the group’s highly-leveraged debt position – is the financing option “with the highest probability of success”. The planned equity raise is fully underwritten. Aryzta has earmarked €150m for its ‘Project Renew’ programme designed to revitalise the company’s fortunes. The group expects to be generating cost-savings of €90m a year by 2021. Aryzta’s underlying ebitda was 28.2pc lower at €301.8m in its last financial year.