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Aryzta Makes 'Tough But Necessary Call' To Raise €800 Million In Equity

Published on Aug 14 2018 10:30 AM

Aryzta Makes 'Tough But Necessary Call' To Raise €800 Million In Equity

Aryzta, the Swiss-Irish baker who owns Cuisine De France, is looking to raise up to €800 million of equity capital to help it pay its debts after a rough 2018.

The group has debts amounting to €1.6 billion after the company has seen its share price plummet since the start of the year, clearing almost €200 million off its value.

“A significantly improved capital structure will provide Aryzta with the means to continue to take the necessary steps to re-position the business and deliver on our strategy,” said CEO, Kevin Toland in yesterday’s statement.

“Over the medium-term, we expect to generate significant cash flow which will be applied towards continued net debt reduction and to resource selective growth opportunities.”

The group has issued a string of profit warnings since December 2016, and its shares have called by 80% since the same period.

Last Resort

According to the Irish Independent, CEO Kevin Toland told analysts yesterday that equity fundraising “wasn’t our preferred choice”.

“[€800 million] is the number we determined was the right mix to let us develop the business, to have a normalised debt structure and lower levels of leverage,” he said.

Last December, Aryzta chairman, Gary McGann said that a cash call would be the last resort. At the time he said taking the “easy path” and asking shareholders for additional funds was “probably the wrong way round”.

Toland yesterday admitted that the decision was a “tough but necessary call”.

"It wasn't our preferred choice," Toland said. "I said we needed to do all the things that management should do in terms of conserving cash, trying to increase EBITDA and manage the business which we have been doing and are continuing to do,” he added

"I guess the real issue is we need more time and we need more space and we need more flexibility to implement for us, I believe, a very good winning strategy for the business."

The group confirmed that its fourth quarter of the 2018 fiscal year was ‘in line with expectations’. The group expects a FY2018 EBITDA of between €296 and €304 million.

Despite the need for shareholder support, Toland is “absolutely confident” that the business has turned the corner.

© 2018 Checkout – your source for the latest Irish retail news. Article by Aidan O’Sullivan. Click subscribe to sign up for the Checkout print edition. 

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