Aryzta, the financially troubled Swiss-Irish bakery business, plans to raise EUR800m (US$910.7m) in equity to bolster its capital structure and reduce debt.
The Switzerland-based firm said the plan is a result of a “comprehensive review” of its operations and comes on the back of two earnings downgrades this year, one in May and the other in January. In May, Aryzta initiated a EUR200m three-year cost reduction plan to restore ”financial flexibility” and improve its asset and cost base.
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And today (13 August), Aryzta said it is seeking to deliver EUR90m in annual cost savings by fiscal year 2021 under its Project Renew targets and is also looking to make amendments to the terms of its loans and revolving credit facility.
“In addition to the announced capital increase, [Aryzta] remains committed to its previously announced EUR1bn deleveraging plan, comprising at least EUR450m of asset disposals and the balance from cash flow generation,” the company said in a statement.
Chief executive Kevin Toland said: “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. 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.”
Aryzta also confirmed today trading in the fourth quarter was “in line with expectations”. It sees EBITDA for this year coming in between EUR296m and EUR304m, as per the guidance outlined in May.
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By GlobalDataThe company said today further details on the terms and conditions of the capital increase and loan amendments will be revealed in conjunction with its annual results on 1 October. The rights issue is targeted to be executed in the fourth quarter, subject to shareholder approval.
“Aryzta has undertaken an in-depth review of its strategy and developed a bottom-up business plan, focused on capitalising on its established, leading positions in the large and growing frozen bakery market globally,” today’s statement said.
