June 17, 2019 / 12:42 PM / 4 months ago

TIMELINE-Spanish retailer DIA's battle for survival

June 17 (Reuters) - Spanish retailer DIA has missed a deadline to agree a restructure of its towering debt but said on Monday its main shareholder, investment fund LetterOne, will keep trying to reach a deal.

The fresh money is required by the fund owned by Russian tycoon Mikhail Fridman for DIA to implement a 500-million-euro share-capital increase approved by the shareholders’ meeting on March 20.

The target date for the agreement was June 15.

Here are the highlights of the retailer’s battle for survival and LetterOne’s path to ownership. July 28, 2017: LetterOne, a Russian fund controlled by Russian tycoon Mikhail Fridman and specialised in retail business, buys 3% of DIA shares with an option to raise it to 10%. Oct. 26: DIA shares hit a five-year low after a profit warning citing lower sales and price competition. Jan. 19, 2018: LetterOne becomes DIA’s main shareholder after raising its stake to 15% and says it could raise it to 25%. However, the fund tells the Spanish market regulator it does not intend to make a public offer for the whole group. April 3: DIA says it signed an agreement to sell its business in China. May 10: DIA reports a 10% drop in first-quarter EBITDA, blaming stiff competition in Spain and sharp devaluation of the Argentine peso and the Brazilian real in its two emerging markets. Shares fall 5%.

July 31: DIA’s share price falls below 2 euros for the first time since its IPO in 2011 priced at 3.307 euros per share. Aug. 30: DIA signs an agreement with Casino, Metro and Auchan, joining a global purchasing alliance. Sept. 28: LetterOne declares it owns 29% of DIA directly and indirectly after a purchase of 4% in derivatives.

Oct. 15: DIA issues a third profit warning within a year and suspends the dividend for 2019. Shares plummet 31% in their worst day ever.

Dec. 10: DIA drops out of Spain’s blue-chip index Ibex-35. Dec. 28: The retailer says it is close to a 200 million euro refinancing deal, to be sealed by the end of May. Dec. 31: DIA says secures nearly 900 million euros in financing with a group of unnamed investors. In return, it commits to a capital increase of at least 600 million euros and to continue the divestment procedures for its Clarel and Max Descuento businesses. Feb. 5, 2019: LetterOne launches 300 million euro takeover bid for DIA offering 0.67 euros per share for the 70% that it does not already own - a premium of around 56%. The Russian fund says it intends to delist DIA. March 4: DIA says LetterOne’s proposal fails to provide solutions to short-term challenges, while the fund accuses the management of misleading investors over its recapitalisation plan. March 20: DIA shareholders approve LetterOne’s 500 million euro capital hike plan, which was a condition for LetterOne’s takeover bid, and reject a rival 600-million-euro plan proposed by the board.

March 28: Spain’s market regulator approves the bid. LetterOne says it expected the supermarket chain to make no profit for two years after it completes the takeover.

April 9: DIA board endorses the LetterOne bid, says “in the current circumstances, it is the best alternative for shareholders, creditors, employees, franchisees and suppliers of the group”. April 26: LetterOne says the bid will go through if it gets additional 20% of DIA shares, down from an initial 35% target.

May 8: DIA board endorses the amended offer. May 17: LetterOne wins control of DIA after acquiring additional 41% of shares, which gives the fund nearly 70%.

It says it has reached agreement with 16 of its 17 lenders on a refinancing plan needed to launch the capital raise. The holdout bank, which LetterOne did not name, could stymie the plan.

May 20: Santander Chairwoman Ana Botin tweets the bank has decided to “support DIA and its employees”.

Letterone said the Spanish retailer reached an eleventh-hour deal to secure financing, staving off the imminent risk of having to start insolvency proceedings. June 17: DIA says the agreement with the syndicated lenders needed for the implementation of the 500-million-euro share capital increase has not been reached within the contemplated deadline of June 15, and the negotiations are still ongoing.

LetterOne reserves its right to terminate the lock-up agreement at any time, in case a deal that ensures a viable long-term capital structure for DIA cannot be promptly reached. ($1 = 0.8917 euros)

Reporting by Anita Kobylinska, Edited by Andres Gonzalez/Tomasz Janowski and Emelia Sithole-Matarise

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