Madrid, 15.10.2018 – Following the publication of Aryzta’s full year figures on October 1, 2018, Cobas Asset Management (“Cobas”) was pleased to see that the business has stabilized, and the management has set mid-term targets. Cobas is also pleased to see the covenants have been reset to provide the Company with a year to restructure the balance sheet. As the largest shareholder of Aryzta with 14.5% of the shares and votes, and as a supportive, constructive and long-term oriented investor, Cobas naturally endorses measures to strengthen the balance sheet to enable Aryzta to develop its value creation potential.
However, Cobas cannot defend actions that lead to such destruction of shareholder-value as would occur through the highly dilutive capital increase proposed by Aryzta’s Board of Directors. Therefore, Cobas sees itself compelled to vote against the Board of Directors’ proposal at the upcoming AGM.
As a result, Cobas has developed together with financial advisors an alternative plan that supports the company to the same extent – while protecting shareholder – value as well as enabling future value creation.
The following is a summary of the alternative plan that takes all stakeholders, including shareholders, into account:
- Cobas will support a EUR 400 million capital increase
- Cobas will ask the Board to seek the sale of some non-core assets. Serious expressions of interest from third parties for several assets have already been received: Non -core assets amounting to at least EUR 250 million in value, for which a ready buyer at a reasonable price is available, could be disposed of in a very short time frame
- This alternative proposal of raising EUR 650 million (EUR 640 million net of expenses) significantly improves the outlook for shareholders in the medium term in comparison to the EUR 800 million (EUR 750 million net of expenses) proposed by the Board:
1.Senior debt/Covenant ratio will come down immediately to around 3x, therefore meeting all the funding requirements of the Management Plan
2. Dilution will be significantly reduced. The alternative plan would increase the value per share by over 30% compared to the Board’s proposal
- Total liquidity will be increased up to EUR 1 billion in 12 months, through the sale of other non-core assets (including the Picard stake)
- Cobas urges the Board to seek a credit rating and seek alternative funding structures including subordinated debt and/or a senior bond. We believe the market has appetite for such a transaction
- If for any unforeseeable reason the company would still require further funding, we are prepared to back the Company with up to a EUR 400 million additional capital increase in the next 12 months, if properly explained
Despite the beneficial alternative proposal of Cobas, Aryzta’s Board of Directors has unfortunately rejected the addition of our proposition to the agenda of the AGM on November l.
Consequently, Cobas has asked Aryzta’s Board of Directors to call an EGM to present this proposal directly to all shareholders, subject to the majority of the shareholders rejecting the proposed EUR 800 million capital increase in the forthcoming AGM. We expect the Board of Directors to call the EGM as soon as possible.
However, should the majority of the shareholders unexpectedly support the Board of Director’s proposed EUR 800 million increase at the AGM, Cobas intends to fully exercise its pro rata share in the rights issue to emphasize its full support towards Aryzta at all times.
Please find more details on the alternative proposal (shareholder presentation) and our letter to the Board of Directors of Aryzta.
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