Commerzbank exits €40m of Aryzta loans at a discount

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Commerzbank exits €40m of Aryzta loans at a discount


Aryzta CEO Kevin Toland
Aryzta CEO Kevin Toland

Commerzbank has cut its exposure to Aryzta, the Swiss-Irish Cuisine de France owner that has issued two profit warnings this year, according to people familiar with the matter.

The German lender sold €40m of debt owed by the firm at about 93 cents on the euro, the people said, asking not to be identified because the deal is private. Commerzbank sold the block of Schuldschein – a form of promissory note popular in German-speaking countries – to a single investment fund last week, they said.

Spokesmen at Commerzbank and Aryzta declined to comment on the sale.

The company must show its creditors its debt levels are under four times earnings by the end of this month in order to comply with the terms of its loans, according to a report by brokerage Vontobel.

It company disclosed earlier this year that the ratio stood at 4.21 times at the end of January, within a requirement set then at 4.75 times.

The Aryzta management – led by former DAA boss Kevin Toland – has said it plans to shave €450m from its leverage by the end of this fiscal year through a series of asset sales.

The rising cost of key ingredients in the company’s products has pressured margins and the firm warned in January that annual earnings before interest, tax, depreciation and amortisation would be 15pc less than a year earlier.

In May, it reduced guidance again by as much as 12pc and embarked on a senior management reshuffle.

Aryzta’s shares have dropped almost two-thirds since the beginning of the year.

After a profit warning in May, Societe Generale analyst Warren Ackerman told Mr Toland that he was “struggling a little bit to see another reason for the double-digit downgrade”. He added: “I’m still a bit surprised that you’re still saying that you’re underestimating the challenges in the group… all the factors that you’re flagging today are the same factors as we’ve heard before.”

In response Mr Toland said that a number of issues were taking longer to resolve than the company had hoped and that industry conditions were “very challenging”. (Bloomberg)

Irish Independent

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