Cobas EGM Request: Aryzta will answer «in due course»

Zurich / CH. (aag) Swiss-Irish Aryzta AG announces that it has received on October 15 a request from Cobas Asset Management SGIIC, S.A., in its capacity as fund manager of certain funds, to convene an extraordinary general meeting of Aryzta. Conditional upon Aryzta shareholders not approving the fully underwritten EUR 800 million capital increase proposed by the Board of Directors of Aryzta at the annual general meeting of Aryzta scheduled to be held on 01 November 2018, Cobas has proposed an ordinary capital increase for the purpose of raising gross proceeds of approximately EUR 400 million for consideration by shareholders at an extraordinary general meeting.

The Board of Directors will analyse the request and proposal and will publish its position and the date of the extraordinary general meeting in due course. As previously communicated, the Board of Directors has proposed a fully underwritten capital raise of EUR 800 million for approval by shareholders at the AGM. There will be no change to the date of the AGM or to the agenda items to be considered at that meeting.

The Board of Directors and the Executive Committee unanimously believe that a capital raise in an amount of EUR 800 million is in the best interests of Aryzta, a majority of its shareholders and its other stakeholders, is the financing option and transaction which has the highest probability of success for Aryzta and all stakeholders, including its shareholders and is the only proposal that addresses the critical issue of commercial confidence in the Group. The Board of Directors and the Executive Committee unanimously believe that a capital raise of EUR 800 million is required in order to strengthen Aryzta’s balance sheet, provide necessary liquidity and working capital funding, provide the Group with the time and financial flexibility to deliver on its multiyear turnaround plan and enable Aryzta to maximise the value of its non-core asset disposals for further net leverage reduction. As such, the Board of Directors recommends that all shareholders vote in favour of its capital raise proposal at the AGM to be held on 01 November 2018.

Cobas: asked Aryzta’s Board of Directors to call EGM

Madrid / ES. (cam) Following the publication of Aryzta’s full year figures on October 01, 2018, Cobas Asset Management 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 Swiss-Irish Aryzta AG with 14.5 percent 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 percent 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 0l.

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 Cobas’ letter to the Board of Directors of Aryzta on Cobas’ website.