McDonald's hamburger buns maker Aryzta's plan to raise €800 million in new capital is excessive, the company's biggest shareholder said on Monday, adding it would present less-dilutive alternatives soon.
Aryzta's stock jumped as much as 35% on hopes that the move by Cobas Asset Management, which has a stake of more than 14.5%, would force the Swiss-Irish bakery to take more modest steps as it seeks to cut debt and restore growth.
The shares were up 25% by 1211 GMT. They are down by two-thirds this year and more than 85% since 2014.
Rising Costs
Aryzta, which also has Otis Spunkmeyer cookiesLa, Brea Bakery breads and Cucina Grande pizza, has been hit partly by rising costs in North America and weak consumer spending in some European markets, particularly in Britain after its Brexit vote.
Earlier this month Aryzta, which lost more than $1 billion in 2017, struck a deal with banks on a capital increase.
Cobas, which has been building up its Aryzta holding in recent months, said progress so far by new Chief Executive Kevin Toland had convinced it that less dramatic measures than the proposed €800 million capital increase were needed to get the company back on track.
"The company does not require such a highly dilutive capital increase," a Cobas spokesman said when asked for comment on the company's results.
"Principally we endorse the intention to strengthen the balance sheet. To that effect, we are reviewing alternatives that will improve upon the company's proposal."
Cobas, based in Spain, said it would present its plans to the board or call for an extraordinary general meeting.
Shareholders had been set to vote on Nov. 1 on the capital increase.
Aryzta reported a full-year loss of €470 million on Monday, hit again by distribution and labour costs. It made a €907 million loss a year earlier.
For its underlying business, Aryzta said it expected the current 2019 fiscal year to be "stable" as its cost-and-debt cutting programme called "Project Renew" takes hold.
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