Aryzta, a baked goods corporation based in Zurich and known for the brand Cuisine de France in Ireland, recently repaid the remaining hybrid debt-equity instruments of 325.4 million Swiss francs (€346.2 million). This repayment is a significant step in Aryzta’s financial restructuring endeavour after its past challenging circumstances.
These bonds were redeemed with all pending interest paid, said the Swiss-Irish organisation last Friday. Notably, the bonds were perpetual, meaning there was no specific date set for them to be returned.
The company used a mix of cash and advances from a new revolving credit facility, established in September, for the repayment. This deal successfully closes a form of debt, which had particularly worried the market during a time when Aryzta was under attack from proactive shareholders and experienced a significant boardroom upheaval four years ago.
Back then, the interest on the bonds was being added to the principal, thereby ramping up the group’s financial strain. However, under the new board chaired by interim CEO Urs Jordi since late 2020, Aryzta managed to repay €880 million in hybrid bond principal, as well as compounded and deferred interest.
The repayments were partially funded by cash generated from the divestment of unrequired assets such as Aryzta’s former problematic North American enterprise and its Brazilian division.
Aryzta asserted that these hybrid bond repayments have enabled the group to diminish its debt load to below three times their earnings before interest, tax, depreciation and amortisation (Ebitda). This significantly lowered their financing expenses, considering that their debt was recorded at €1.89 billion mid-2020 – representing 7.3 times Ebitda.
Chairman Mr Jordi lauded this as a crucial achievement for Aryzta, adding that shareholders have greatly profited from their hybrid bond redemption scheme. This recent redemption is projected to yield €11.5 million interest cost savings by 2025 and signifies Aryzta’s unwavering commitment to enhancing business performance and cash generation.