Spanish supermarket group DIA said on Thursday it has agreed to convert debt owed to its main shareholder LetterOne into equity and will additionally offer new shares to existing shareholders for a total €1.028 billion ($1.21 billion).
The company plans to convert €769 million it owes to LetterOne into shares worth the same amount and will offer its existing minority shareholders up to €269 million worth of new shares.
The move reduces DIA's leverage by 60%, strengthening its solvency and improving liquidity. The company added that it will not have to face significant debt maturities until the end of 2025.
The agreement replaces a previously planned €500 million debt-to-equity conversion announced in November and will enable DIA to reduce debt and allow the management to focus on execution of the company's business plan, it said.
'Support And Commitment'
DIA president Stephan DuCharme, commented, “The extension of the agreement reached last year comes as a response to everyone's support and commitment to this project.
"The business plans that have been put in place and the results they are giving are a sign of the solid confidence and faith that both creditors and the main shareholder have in the success of DIA. Furthermore, it is an opportunity for all shareholders, minority and institutional, to be part of the company's growth story ”.
The debt-laden Spanish retailer has benefited from customers shopping more frequently at its neighbourhood stores during COVID-19 lockdowns and restrictions on movement.
Last month, DIA reported that its net loss narrowed to €364 million in 2020, compared to €791 million in 2019.