DIA believes that it will disappear with the proposal of Fridman

DIA believes that it will disappear with the proposal of Fridman

Its board advises the CNMV that the expansion of 500 million Russian investor will lead to the dissolution or the bankruptcy

   Last minute notice, in full Sunday, of the Board of Directors of Dia before the National Securities Market Commission (CNMV). In a relevant event, the management of the supermarket chain has warned of the consequences for the company of the capital increase proposed by its largest shareholder, the LetterOne firm headed by the Russian tycoon Mikhail Fridman: the company will be doomed dissolution or bankruptcy.

   The alert launched by Dia comes when there are only two weeks left for the shareholders' meeting to take place - the next day 20 - in which the owners will decide the future of the corporation. For the current board, LetterOne's offer, "as currently configured, does not provide effective and immediately executable solutions to the challenges the company faces in the short term." This press release joins the one issued last Friday, where the board showed its disagreement with the proposal of LetterOne, which controls 29% of the company.

If shareholders do not approve the plan and LetterOne does not gain control of Dia, there could be no viable alternative for the chain "beyond a complete financial restructuring, insolvency or dissolution," they argue. The Russian investor requires acceptance of the OPA at 0.67 euros per share by at least 50% of the shareholders excluding LetterOne, which "limits the ability of current shareholders to participate in the future creation of value" .

In addition, it also fails to solve some problems, such as the current negative equity situation , the debt maturities of May 31, 2019. Nor does it offer an alternative solution to the capital structure if the takeover bid fails. However, the company is willing to reach a viable solution with LetterOne due to its experience in the sector.

Dia and its board of directors "are open to continue working with LetterOne so that its proposal is acceptable to all stakeholders, ie, shareholders, creditors, employees and suppliers, while ensuring compliance with all operational commitments, regulatory and financial ».

In addition, remember that fundamental changes have been introduced in the management team , with top-level managers who are attracted to this transformation project, and has worked with external advisors to negotiate and implement a plan for sustainable refinancing and recapitalization.

Said plan, subject to the approval of the shareholders, is fully enforceable, once an agreement has been reached with the creditor banks that ensures the needs of working capital to support the operations.

It was last February 21 when the Russian investor Mikhail Fridman made official his takeover bid for about 70% of the titles he does not have, although his goal is only to achieve a majority of command. For this reason, he made it a condition to obtain the support of a minimum of 35.5% , in addition to not having a previous capital increase and reaching an agreement with the bank to refinance the debt, given that the latter has signed "exchange clauses" of control "that would allow you to suspend your commitments and be more severe if you change the current address of the company.

These Russian investors have a guarantee from the Swiss bank UBS for at least 296 million euros. His proposal, advanced on February 5, is 67 cents per title and do not plan to raise it. There are five more than its last closing -the firm has revalued 44% in these weeks-, although then it improved by 52.5% the weighted average price per volume of the last month.

With the numbers of Fridman and LetterOne, Dia would be worth 417 million , a very low figure in the opinion of the board of directors, which has called the meeting to increase capital by 600 million. If successful, the Russian tycoon offers to do the same but for 500 million and crosses out the proposal of the current direction of "uncertain and very dilutive" for the partners, given that by resorting to a previous operation 'accordion' (first reduce the nominal value of the action) those who do not go to its expansion would lose almost 90% of the money invested (they would be the same titles but they would represent much less social capital).