Aryzta has fallen off Switzerland’s blue-chip share index after a catastrophic share price plunge in recent months.
The company now sits on an index for small and mid-sized firms.
It’s a symbol of how far the company has fallen in recent years – with billions in shareholder value vaporised.
The company is in the process of raising as much as €800m as it seeks to give itself breathing space to pay down a heavy debt burden.
In Switzerland the company is now valued at around CHF910.6m (€795.8m). That compares to almost CHF6bn at the end of July 2014.
In an announcement the Swiss market authorities said Aryzta would be excluded from the SLI index – which encompasses the 30 largest and most liquid shares on the Swiss equity market – following a regular review of the index.
The downgrade will hurt Aryzta’s market visibility as it seeks to raise the fresh capital. Given that is the case, it may also prompt questions about whether a dual listing in Ireland and Switzerland is worth maintaining.
Ian Hunter, an equity analyst at Investec, said that the way the share price performs between now and the end of October, may provide clues about how the planned fundraising is being taken by the market.
The company has said it wants to execute the transaction in the fourth quarter of the year, and it’s due to update shareholders further when it publishes full-year-results on the end of October.
“If the share price holds as it is now until the end of October, then you’re dealing with a situation where the holders probably are ready to take the dilution in the expectation that the price will pick back up once they get their fundamental business in order,” Mr Hunter said.
“If you see the share price weakening more it means that people are still selling out and are not interested in the share placement … it’s going to be fairly dilutive.”
The company’s listing in Switzerland arises out of its birth in the merger of the Irish Agricultural Wholesale Society (IAWS), and Swiss food business Hiestand. IAWS boss Owen Killian sealed the deal and became CEO of the merged entity, growing it substantially via acquisition and becoming one of Ireland’s best-paid bosses.
A poorly-received acquisition of a 49pc stake in French frozen food retailer Picard, as well as a strategic decision to begin competing directly with some business customers by marketing products directly to consumers, were among the factors that saw sentiment around the company reverse however.
In addition, Mr Killian was forced to sell shares in the business after a margin call caused by a fall in the share value. He expressed “regret” at the position.
Mr Killian was replaced as CEO last year by Kevin Toland, a former senior Glanbia executive whose last job was as head of the DAA. After a number of profit warnings and asset sales, Mr Toland has now made the decision to seek to raise the €800m from the market.
He told analysts last week that the capital raise would provide the company “with a significantly improved capital structure and the means to continue to take the necessary steps to reposition the business and to deliver on our strategy and over time to rebuild and restore shareholder value”.
“I think [the capital raise] wasn’t our preferred choice and I’ve made that very clear to people.
“I said we needed to do all the things that management should do in terms of conserving cash, trying to increase ebitda [earnings before interest, tax, depreciation and amortisation] and manage the business, which we have been doing and are continuing to do.
“I guess the real issue is we need more time and we need more space and we need more flexibility to implement for us, I believe, a very good winning strategy for the business.”
As yet the company has been unable to divest its stake in Picard, though a process is ongoing in that regard.
“It’s just not one for us given the good opportunities that we have elsewhere and the need for us to restructure our own balance sheet and we’re determined to exit and exit at fair value, but that’s taking us longer than we would like,” Mr Toland said.