* Aryzta board plans 800 mln euro capital increase
* Cobas called for 400 mln euro increase
* Aryzta says Cobas proposal inadequate, risky (Adds detail, background)
ZURICH, Oct 16 (Reuters) - Swiss-Irish baker Aryzta stood by its plan to raise 800 million euros ($926 million) in new equity to meet its liquidity and financing needs, criticising a proposal by its biggest shareholder to raise only half that amount as inadequate and risky.
On Monday, Cobas Asset Management, which has a 14.5 percent stake in the maker of McDonald’s hamburger buns, put forward an alternative plan for a 400 million euro capital increase and the sale of non-core assets it said could raise a further 250 million euros.
“The Board of Directors and executive management of Aryzta remains firm and unanimous that 800 million euros of equity capital is required to reduce its excessive debt levels, strengthen its balance sheet and provide the necessary liquidity and working capital funding to deliver on its multi-year turnaround plan,” the company said in a statement on Tuesday.
“The Board of Directors unanimously believes that the Cobas proposal is inadequate and presents significant execution risk for shareholders,” it said.
Aryzta said that while its own proposal for an 800 million euro capital increase was fully underwritten, the 400 million capital hike proposed by Cobas was not underwritten and there was no guarantee it would be possible to underwrite it given the board’s concerns.
Aryzta said the capital increase proposed by the board could be completed within approximately three weeks if it was approved at the annual general meeting on Nov. 1, and so presented a much lower execution risk than Cobas’s proposal.
“Furthermore, the capital raise needs to be a one-time transaction to fix the balance sheet, while a staged capital raise, as suggested by Cobas, would add significant commercial and financial uncertainty,” Aryzta said.
Earlier on Tuesday, proxy adviser ISS had recommended that shareholders reject the capital increase proposed by the board given Cobas’s resistance. ($1 = 0.8638 euros) (Reporting by Silke Koltrowitz; Editing by Alison Williams and Adrian Croft)