PARIS — Because of the uncertain economic environment, Givaudan will increase its capital by about 420 million Swiss francs, or $391.7 million at current exchange, to deleverage its balance sheet and increase operational flexibility.
The Swiss flavors and fragrance firm will issue 999,624 shares at a unit price of 420 Swiss francs, or $391.70, this month.
The move will reduce Givaudan’s absolute level of debt to be refinanced in 2011 and in 2012, and it is meant “to broaden the future refinancing options,” the company stated. “Givaudan intends to apply the net proceeds of the rights issue to prepay part of the syndicated loan facility arranged as part of the Quest acquisition [in March 2007].”
Givaudan’s net debt is 2.5 billion Swiss francs, or $2.3 billion.
Its capital increase is also “intended to create operational flexibility and to improve the company’s capital structure.”
Givaudan gave guidance including the expectation it will reach annual sales of 620 million Swiss francs, or $578.4 million, incremental to market growth by 2013. It also anticipates achieving a pre-Quest acquisition EBITDA margin of 22.7 percent by the end of 2010. Capital expenditures should reach 3 percent to 4 percent of sales this year and about 4 percent between 2010 and 2012, Givaudan stated.
On Thursday, in an unusual move, the company reported a first-quarter 2009 performance update. Operating profits were 110 million Swiss francs, or $96.1 million at average exchange for the three-month period ended March 31. EBITDA came in at 181 million Swiss francs, or $158.1 million. On a comparable basis, it was 201 million Swiss francs, or $175.6 million, which was 20.6 percent of sales in the period.
As reported, Givaudan’s first-quarter sales slid 7.3 percent to 976.1 million Swiss francs, or $852.7 million, due to de-stocking throughout the supply chain.