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Deoleo closes a deal with its creditor financial institutions to refinance its debt, which could be reduced by more than 330 million euros

Deoleo has reached an agreement with most of its creditors to refinance its current debt structure of EUR 575 million, which could reduce it by more than EUR 330 million. This agreement has so far been signed by entities representing more than 79% of the current debt. 

This agreement is a milestone in the company’s history. After the restructuring process the group will have new funds and a new corporate and financial structure that will allow the company to fulfill its financial commitments and obtain long-lasting stability to continue implementing its business plan. Despite the share capital reduction that the Company approved at the last general meeting of shareholders to shore up the balance sheet,  Deoleo’s equity has continued to deteriorate in recent months, and recently became negative. Therefore the agreement will enhance a positive forward-thinking strategy for Deoleo, which will allow the business to continue to focus on further enhancing Deoleo’s leadership role in pressing for stricter quality regulations and category standards in the global industry, along with clear and transparent consumer relations and sustainability for both the environment and the marketplace.
The refinancing process also includes a corporate reorganization, as well as injecting equity through a €50m capital increase to repay part of the current financial debt;  a capital reduction to compensate losses, that will be executed before the capital increase; the capitalization of a large share of the current debt; and, refinancing the rest of the debt, thereby extending its maturity.
Debt restructuring
According to the agreement, the current syndicated debt could be reduced by up to €333m as a consequence of the repayment with funds provided by a capital increase of up to €50m and thanks to a debt for equity swap of up to €283m in exchange for 49% of the capital of the new operating business. The rest of the current debt, €242m, will be considered as sustainable debt and will remain as long-term loans with significantly extended maturities.
Reduction and Simultaneous Increase of Capital
In order to complete the restructuring agreement, Deoleo’s Board of Directors will propose the above agreement and reorganization to the Shareholder’s Meeting, as soon as the necessary reports and audited balance sheets are available, in order to execute a reduction and simultaneous increase of capital in a timely manner.
This process will involve a capital increase up to a maximum of €50m with preemptive subscription rights for current shareholders. The capital increase will be executed after a capital reduction to zero. Deoleo’s majority shareholder, CVC, has agreed to support the success of the transaction and for this purpose it has committed to secure up to €40m of the capital increase.
Along with this process, the company intends to issue warrants for retail shareholders who own preferential subscription rights in the capital increase. The warrants will be granted without additional cost and will allow their holders to benefit from a future revalorization of Deoleo’s business, above certain thresholds, on the occasion of a sale, a merger or similar development.
Implementing this process will entail the dissolution and liquidation of the company that issued preferential shares, Deoleo Preferentes, S.A., in accordance wih current regulations about the issue and liquidation of Preferential Shares. Instead, the company will enable holders to participate in the previously mentioned capital increase.
Corporate reorganization
The agreed corporate restructuring conditions that Deoleo S.A. will transfer almost all its assets and liabilities to a newly-created subsidiary company that will subsequently operate the business.
After concluding the restructuring process, creditors will control an aggregate of 49% of Deoleo’s business.Current shareholders, who underwrite the monetary capital increase and new subscribers, including Preferential Shares holders, will control the remaining 51%.
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