The stock market has been unsettled by reports that Dutch retailer Ahold is planning a €2bn (US$2.2bn) rights issue to reduce its €12bn debt.
The Financial Times and Wall Street Journal reported that Ahold was considering a cash call, although Ahold spokesman Walter Samuels dismissed such reports as mere speculation.
The company is carrying out a clean-up campaign after profits at its U.S. Foodservice division were grossly overstated. Senior figures in the company, including chief executive Cees van der Hoeven, left the company during the aftermath. Units in Latin America have been divested to refocus the business, but the company is expected to hold on to U. S. Foodservice.
This Thursday (4 September), Ahold will hold a shareholders meeting during which incoming CEO Anders Moberg will present the bones of a new strategy. It is likely he will decline to pad out the new strategy until October, when the 2002 accounts fall due. Publication of the figures has been delayed twice.
“If the newspapers are informed correctly and Ahold wants to keep U.S. Foodservice, it will have to raise fresh capital and in principle that is bad for shares. If the company continues to say nothing (on its plans), the shares will fall further,” Gert Jan Geels, an asset manager at Eureffect, is quoted as saying by Reuters. Geels said he was not recommending clients buy Ahold shares as a long-term investment.
Reports that Ahold is considering a rights issue do not indicate that this is the likely outcome; they simply confirm that the company is exploring all its options.