Baked goods group Aryzta is standing by its plan to raise €800m in new equity to meet its liquidity and financing needs.
The Swiss-Irish company has criticised a proposal by its biggest shareholder to raise only half that amount as inadequate and risky.
On Monday, Cobas Asset Management, which has a 14.5% stake in the owner of Cuisine de France, put forward an alternative plan for a €400m capital increase and the sale of non-core assets it said could raise a further €250m.
"The board of directors and executive management of Aryzta remains firm and unanimous that €800m of equity capital is required to reduce its excessive debt levels, strengthen its balance sheet and provide the necessary liquidity and working capital funding to deliver on its multi-year turnaround plan," the company said in a statement yesterday evening.
"The board of directors unanimously believes that the Cobas proposal is inadequate and presents significant execution risk for shareholders," it said.
Aryzta said that while its own proposal for an €800m capital increase was fully underwritten, the €400m capital hike proposed by Cobas was not underwritten.
It also said there was no guarantee it would be possible to underwrite it given the board's concerns.
Aryzta said the capital increase proposed by the board could be completed within approximately three weeks if it was approved at the annual general meeting on November 1, and so presented a much lower execution risk than Cobas's proposal.
"Furthermore, the capital raise needs to be a one-time transaction to fix the balance sheet, while a staged capital raise, as suggested by Cobas, would add significant commercial and financial uncertainty," Aryzta said.
Earlier yesterday, proxy adviser ISS had recommended that shareholders reject the capital increase proposed by the board given Cobas's resistance.
Aryzta shares were lower in Dublin trade today.
