Swiss-Irish baker Aryzta stood by its plan to raise €800 million in new equity to meet its liquidity and financing needs, criticising a proposal by its biggest shareholder to raise only half that amount as inadequate and risky.
On Monday, Cobas Asset Management, which has a 14.5% stake in the maker of McDonald's hamburger buns, put forward an alternative plan for a €400 million capital increase and the sale of non-core assets it said could raise a further €250 million.
"The Board of Directors and executive management of Aryzta remains firm and unanimous that €800 million of equity capital is required to reduce its excessive debt levels, strengthen its balance sheet and provide the necessary liquidity and working capital funding to deliver on its multi-year turnaround plan," the company said in a statement on Tuesday.
"The Board of Directors unanimously believes that the Cobas proposal is inadequate and presents significant execution risk for shareholders," it said.
Aryzta said that while its own proposal for an €800 million capital increase was fully underwritten, the €400 million capital hike proposed by Cobas was not underwritten and there was no guarantee it would be possible to underwrite it given the board's concerns.
Aryzta said the capital increase proposed by the board could be completed within approximately three weeks if it was approved at the annual general meeting on Nov. 1, and so presented a much lower execution risk than Cobas's proposal.
"Furthermore, the capital raise needs to be a one-time transaction to fix the balance sheet, while a staged capital raise, as suggested by Cobas, would add significant commercial and financial uncertainty," Aryzta said.
Earlier on Tuesday, proxy adviser ISS had recommended that shareholders reject the capital increase proposed by the board given Cobas's resistance.