French dairy group Danone has unveiled plans to launch an EUR3bn (US$4.2bn) rights issue to existing shareholders.

In a statement, the group said it would use the funds raised to “to strengthen its capital structure, reduce its financial leverage and improve its credit metrics”.

Danone’s sales have been hit by the financial downturn, with weakness in its water and dairy businesses driving total sales down 2.3% in the first quarter.

Nevertheless, reporting its first-quarter numbers last month, Danone reiterated previous guidance of a 10% increase in EPS on a constant currency basis, sales growth just shy of its medium-term guidance and like-for-like improvement in EBIT.

Shares in the French yoghurt maker were down 5.54% at 1.13pm (BST), dipping to EUR37.42.