The company expects to launch the rights issue soon, subject to internal and regulatory approvals, said co-chief operating officer, Emmanuel Faber, in a conference call.
“The proceeds of the rights issue will be used principally for the reduction of Danone’s net financial debt,” Danone said in a statement.
The move will also enable the company to strengthen its capital structure and increase its flexibility to support organic growth and fund small and medium-sized acquisitions.
The group’s ratio of debt to core earnings (earnings before interest, tax, depreciation and amortisation) will decrease to 1.7 from 2.8 after the rights issue, said Faber.
The company also reiterated its full-year target for like-for-like sales growth of a few points below its medium-term guidance of 8-10%, and a like-for-like improvement in its operating margin.
Danone stuck to its forecast for underlying, fully diluted earnings per share at constant exchange rates to rise 10% this year, excluding the dilutive effect of the issue of new shares.
The move follows a €1.04bn rights issue by French spirits group Pernod last month, to help cut its more than €12bn of debt. The company offered shareholders a 36% discount.
Source: Reuters, Danone
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