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Aryzta AG: intends to raise up to 800 million Euro

Zurich / CH. (aag) The Board of Swiss-Irish Aryzta AG has resolved that following a comprehensive review of its capital structure it intends to raise up to EUR 800 million of equity capital to strengthen its capital structure and provides an update on its strategic, operational and financial developments.

  • Aryzta plans to raise up to EUR 800 million of equity capital to create the necessary strategic and financial flexibility to implement its business plan
  • Confirms compliance with the covenants in FY2018
  • Confirms that Q4 trading was in line with expectations, including meeting Ebitda guidance for FY2018
  • Project Renew targets to deliver annual cost savings of EUR 90 million by FY2021
  • Seeks amendments to the terms of its Term Loan and Revolving Credit Facility
  • In addition to the announced capital increase, remains committed to its previously announced EUR 1 billion deleveraging plan, comprising at least EUR 450 million of asset disposals and the balance from cash flow generation
  • Will provide further details, including on the planned capital raising, in conjunction with the FY2018 results on 1 October 2018

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.

Aryzta Chief Executive Officer, Kevin Toland, commented: «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».

The following material updates are provided in the context of Aryzta’s ongoing strategic, operational and financial developments. Aryzta closed its FY2018 on 31 July and is currently in a closed period.

Capital Increase

Aryzta has undertaken a detailed review of its capital structure with the assistance of BofA Merrill Lynch, UBS and Rothschild + Co. In order to create the necessary strategic and financial flexibility to implement its strategy and sustainably strengthen its capital base, the Board of Directors of Aryzta plans to engage with its shareholders to raise up to EUR 800 million of capital, primarily through a rights issue with pre-emptive rights for ex- isting shareholders. The proceeds from the capital increase are targeted mainly for debt reduction. BofA Merrill Lynch and UBS have been appointed as Process Banks and Joint Global Coordinators; Credit Suisse and JP Morgan have also been appointed as Joint Global Coordinators to arrange the capital increase.

Current Performance

Aryzta confirms that trading in the fourth quarter of FY2018 was in line with expectations and expects a FY2018 Ebitda of between EUR 296 and EUR 304 million, in accordance with the guidance provided on 24 May 2018. Furthermore, Aryzta confirms that it was in compliance with its covenants in FY2018.

Deleveraging Plan

Aryzta remains committed to the EUR 1 billion deleveraging target over four years (prior to the announced capital raise), including at least EUR 450 million of disposal proceeds and the balance from cash flow generation as communicated on 25 January 2018. Aryzta has already made solid progress with several non-core asset disposals and remains commit- ted to the disposal of its stake in Picard for which the process remains ongoing. Picard continues to deliver a strong performance and through the refinancing carried out since December 2017 has delivered EUR 91 million of dividends to Aryzta, supporting our FY 2018 Ebitda.

Project Renew

The operational improvement of the business plan is underpinned by Project Renew, a comprehensive set of initiatives targeting annual run rate cost savings of approximately EUR 90 million by FY2021, enabling a three-year cost reduction of approximately EUR 200 million for FY2019 to FY2021, includ- ing: operating model cost reductions; procurement and supply chain initiatives; and automation initiatives. Associated with realising the cost savings, Aryzta expects non- recurring expenses of approximately EUR 150 million over the next 3 years.

Next Steps

Further details on the terms and conditions of the capital increase and loan amendments will be communicated in conjunction with the FY2018 results on 1 October 2018. The rights issue is targeted to be executed in the fourth quarter of 2018, subject to approval by the shareholders of Aryzta.