McDonald's buns maker Aryzta strikes deal with banks
ahead of capital hike
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[September 11, 2018]
By John Miller
ZURICH (Reuters) - One of the world's
largest bakery companies, Aryzta, has agreed an underwriting deal with
five banks, setting the stage for raising 800 million euros ($928.48
million) in new capital to strengthen its balance sheet.
Shares in the maker of McDonald's burger buns to Otis Spunkmeyer cookies
rose as much as 8 percent after the company named BofA Merrill Lynch and
UBS as lead managers, and Credit Suisse, JP Morgan and HSBC Bank plc as
joint global coordinators of its capital raising.
The Swiss-Irish company has warned on its at least three times since
2017 due to rising distribution and labor costs in North America,
problems with undocumented workers at a U.S. bakery, high butter prices
and weak consumer spending in some European markets, particularly
Britain following its vote to leave the European Union.
Aryzta, which said last month it needed a cash infusion following a net
loss of more than 1 billion euros in 2017, also said on Tuesday it had
won the consent of a majority of its lenders to amend an existing
As part of the deal the company's net debt to EBITDA (earnings before
interest, tax, depreciation and amortization) covenant will rise to 5.75
times, from 4.0 times for January 2019 and to 5.25 times for July 2019
from 3.5 times.
Analyst Andreas von Arx of Baader Helvea said the deal with banks and
lenders "shows Aryzta is making progress toward the capital increase"
and helped t reduce uncertainty.
"The amended credit conditions should provide the flexibility to execute
on the turnaround measures," von Arx wrote in a note to investors.
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A cheesy champignon angus burger is seen at a McDonald's restaurant
in Hong Kong July 27, 2017. REUTERS/Bobby Yip/File Photo
Even so, he is sticking with his "hold" rating, as Aryzta has failed repeatedly
to deliver on priorities of selling assets or stabilizing results. "For the time
being there remain too many unknowns to credibly forecast a mid-term valuation,"
The shares are down more than 75 percent this year.
Chief Executive Officer Kevin Toland, whose company also makes Cuisine de France
bread, is still hoping to unload at least 450 million euros in assets, including
its France-based Picard frozen food unit acquired during an ill-fated buying
Aryzta also named new independent board members -- former McDonald's USA
president Michael Andres, Green Chile Foods Chairman Gregory Flack and Tim
Lodge, a former chief financial officer at agribusiness company COFCO
International -- to stand for election at its coming annual general meeting on
"Each brings significant and diverse industry experience which will be
invaluable... as we deliver on what is a multi-year turnaround," Aryzta Chairman
Gary McGann said in a statement.
Director Charles Adair plans to retire.
(Reporting by John Miller; editing by Jason Neely and Louise Heavens)
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