Finnish meat processor HKScan plans to issue additional shares to strengthen its financial position and capital structure after confirming the number of previously-flagged job losses across its business.

The Helsinki-listed firm said it will look to raise as much as EUR60m (US$67.2m), with an option for a further EUR12m if the issue is oversubscribed, according to a statement today (8 May). An extraordinary meeting has been called for 29 May for the board of directors to approve the share sale.

“The planned share issue is intended to provide a strong foundation for developing the company’s business portfolio and balancing the company’s financial situation and for building future growth,” HKScan explained.

HKScan revealed the share-issue plan in conjunction with its first-quarter results, which showed the company’s losses continued from last year, while sales also inched lower.

Back in February, the company flagged that jobs would be cut as part of a restructuring exercise as HKScan seeks to realise EUR10m in annual cost savings. In April it confirmed 74 positions would be eliminated in Finland, and now, in an update, the company said it has reduced the global headcount by 183 employees, including 69 in Sweden.

The cuts will be initiated by terminating fixed-term and permanent employment contracts and through retirement arrangements.

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Chief executive Tero Hemmilä commented. “Our resolute focus is on strengthening our financial situation. As a result of the group-wide negotiations, the roles and responsibilities in the organisation will be clarified and cost competitiveness will be improved. We will utilise the ideas received from our employees to improve our operations in the future.” 

HKScan said a new series of A shares will be offered to the public in Finland, and another batch to institutional investors in the European Economic Area (EEA), which includes non-EU members. The company also said it is negotiating new financing arrangements for its existing debt obligations and an extension of maturities, which will come “into force if certain conditions, including the share issue, are met”. Net debt stood at EUR364.7m at the end of the first quarter, according to the earnings release. 

So far, the company has received EUR54.8m in commitments from current shareholders and institutional investors to subscribe for the new series A shares. “The commitments have at their lowest been given for a subscription price per share not exceeding EUR1.60”. 

Hemmilä added: “The planned financing arrangement would significantly strengthen the company’s financial position. HKScan is in the middle of a turnaround, and we are focusing on improving the company’s cash flow and profitability according to plan. In addition to balancing the company’s financials in the short term, we are actively assessing the company’s business portfolio and updating HKScan’s strategy, with the help of which we aim to restore the company’s path towards profitable growth.”

In its financial results for the quarter through March, HKScan recorded a net loss of EUR16.9m, narrowing slightly from EUR16.7m a year earlier. The EBIT loss also shrank, coming in at EUR14.7m from EUR18.3m, while net sales dropped 2.2% to EUR401.8m.