Cuisine de France baker rises 18%

Cuisine de France baker rises 18%

John Miller

Cuisine de France bakery owner Aryzta has agreed on an underwriting deal with five banks, setting the stage for raising €800m 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 18% in Dublin after the company named BofA Merrill Lynch and UBS as lead managers, and Credit Suisse, JP Morgan, and HSBC Bank as joint global coordinators of its capital raising. The shares are, however, down more than 66% this year.

The Irish-Swiss company has warned on its at least three times since 2017 due to rising distribution and pay costs in North America, problems with undocumented workers at a US bakery, high butter prices and weak consumer spending in some European markets, particularly Britain following its vote to leave the EU.


Aryzta, which said last month it needed a cash infusion following a net loss of more than €1bn in 2017, also said it had won the consent of a majority of its lenders to amend an existing facilities agreement.


As part of the deal the company’s covenant, net debt to Ebitda — earnings before interest, tax, depreciation and amortisation — will rise to 5.75 times, from four 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 to reduce uncertainty.

The amended credit conditions should provide the flexibility to execute on the turnaround measures.

- Mr von Arx wrote in a note to investors.

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,” he said.


Chief executive Kevin Toland, whose company is best known in Ireland for Cuisine de France, is still hoping to unload at least €450m in assets, including its France-based Picard frozen food unit acquired during an ill-fated buying spree.

Aryzta also named new independent board members — former McDonald’s US 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 AGM on November 1.

“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. Director Charles Adair plans to retire.

— Reuters. Additional reporting Irish Examiner