Likewise, LetterOne considers that the capital increase proposed by the board of directors will not lead to substantial changes in relation to the “important” operational challenges, fundamental strategy and leadership that Dia must face, nor does it solve the need for capital , nor does it lay the foundations for a viable long-term capital structure. In this sense, the company controlled by the Russian investor emphasizes that its capital increase represents an “opportunity” for Dia shareholders to monetize their investment with a premium in the short term. “It satisfies both the interests of shareholders and financial creditors in a fairer and more balanced manner,” LetterOne said, adding that its expansion will allow it to implement its transformation plan for June 2019 Calendar Word. Therefore, it considers that its offer is a “much more attractive” proposal for shareholders “both in terms of value and risk, compared to the alternative proposed by the board of directors” of Dia.
June 2019 Calendar Word
According to LetterOne, its capital increase is “significantly less dilutive” and is subject to “less uncertainty” than the capital increase proposed by the supermarket chain’s board. In terms of dilution, the minimum issue price of the capital increase proposed by the company controlled by Fridman is 0.10 euros per share (including nominal value plus, if applicable, share premium), while the capital increase proposed by the board of directors establishes a minimum price that could be 0.01 euros per share. This means that the capital increase proposed by the board could be ten times more dilutive for Dia shareholders than the capital increase proposed by LetterOne.
In terms of “uncertainty”, the company of June 2019 Calendar Word has confirmed its commitment to subscribe its capital increase in the part corresponding to its participation and also to ensure the part of the capital increase that, in its case, remains unsubscribed for the rest of shareholders. Faced with this proposal, the board of directors has foreseen the possibility of incomplete subscription of the capital increase of 600 million euros, while the commitment of assurance in ‘stand by’ granted by Morgan Stanley “is subject to several conditions of the which there is no certainty that they have been met or will be met “, according to the documentation sent to the CNMV.