Dia formalized this Wednesday with its financial creditor entities the refinancing of a total debt of 885 million euros, with maturities of between three adn five years, and which replaces the syndicated loan that the supermarket company signed at the end of 2018 , in the depths of the group’s crisis, and which was refounded in September 2021 after a recapitalization process.
As detailed to the National Securities Market Commission (CNMV), the Dia will use 755 million euros to early repay the balance kept alive on the balance sheet of that syndicated party. It will also amortize bonds issued in 2017 and those maturing in 2026, for a total of 30.8 million euros, and a bilateral financing debt of seven million euros with one of its creditors.
The company, 77% owned by Letterone, explains that the new financing allows it to “obtain a capital structure that guarantees the Dia Group the flexibility necessary for the execution of its strategic plan, which should be presented in march 2025 in as part of an event aimed at investors (Investor Day), after the presentation of the results corresponding to the 2024 financial year. This last point was a request from small shareholders, who asked Dia management to publicly present its business plans to increase the value of the shares. In recent years, Dia has not shown its strategic plans in detail, beyond its store renovation programs and changes to its current business model.
In this sense, the supermarket group has also announced that it will propose to its shareholders a counter-split, or grouping of shares, according to which 1,000 current securities will represent a new share, increasing their nominal value from 0.01 euros to 10.
“With this operation, Dia aims to place the share price at a value in line with comparable companies listed in Spain in terms of capitalization value. and also with that of other foreign listed companies in the sector”, and adds that it also aims to “improve the market’s perception of the company” and to “limit the volatility of the stock and reduce the possibility of sudden movements in the price of the securities price”.
Dia also says the new financing allows it to strengthen its financial structure by lengthening debt maturities and increasing liquidity,which increases financing limits by 92 million. «With this new financing, the management of the Dia Group will have greater flexibility and freedom to develop its operational activity and focus on future growth», he explains in the communication sent to CNMV.
For it to be fully valid, the agreement must be voted on by the general meeting of shareholders. “This refinancing agreement demonstrates the financial community’s confidence in the company and the success of its business conversion. Let’s take a decisive step forward. With this operation we have the foundations to promote our growth plans in the coming years. the performance improvement was possible thanks to the excellent work of our team and our affiliate network. I am deeply excited that the company is ushering in a new phase of accelerated growth,” Dia CEO Martín Tolcachir said in a statement.
In another statement,the group’s largest shareholder,letterone,states that Dia “stands out as a strategic and long-term investment” and thus “we firmly support the company and its management in this transition towards the new phase of growth. “of business.”
“Letterone supports the refinancing proposal and the Contra Split of Dia at the General Shareholders’ Meeting.This reflects our confidence in the company, its strategic direction and our commitment to Spain, a country with enormous economic potential,” he adds.
How does Dia’s refinancing strategy reflect broader trends in the retail industry?
Interview Between Time.news Editor and Financial Expert on Dia’s Debt Refinancing
Editor: Good afternoon, and welcome to Time.news. Today, we’re diving into a critical development in the retail sector, particularly involving the supermarket chain Dia. With me is Dr. Elena Fernandez, a financial expert with extensive experience in corporate restructuring. Thank you for joining us, Dr. Fernandez.
Dr. Fernandez: Thank you for having me. It’s a pleasure to be here to discuss such an significant topic.
Editor: Dia made headlines this week after formalizing a refinancing deal for a whopping 885 million euros in debt. This amount is significant,especially since it will impact the company’s financial landscape.Could you give us a bit of context regarding Dia’s situation prior to this refinancing?
Dr. Fernandez: Absolutely. Dia has faced a series of challenges over the past few years, particularly from 2018 when they found themselves deeply entrenched in financial difficulties.The company struggled with a declining market share, operational inefficiencies, and internal issues. The syndicated loan they secured back then was a lifeline, but refinancing was always going to be crucial for recovery and stability.
Editor: It sounds like this refinancing is a critical step for Dia. Could you explain how this new deal differs from their previous loan agreement?
Dr.Fernandez: Certainly. The new agreement allows dia to extend the maturities of their debt, shifting the repayment schedule between three to five years. This period is more manageable for the company considering their current operational restructuring. Unlike the previous syndicated loan, which was likely more stringent, this refinancing can provide greater flexibility, essentially resetting their financial obligations in a way that aligns better with their cash flow and recovery strategies.
Editor: Speaking of cash flow,how does this refinancing position Dia moving forward? What are the potential implications for the company’s operational strategies?
dr. Fernandez: This refinancing can be seen as a vote of confidence from their financial creditors. It gives dia breathing room to invest in improving their operations and redefining their market strategy without the immediate pressure of hefty debt repayments. By stabilizing their finances, Dia can focus on enhancing customer experience, revamping stores, or even expanding their product offerings. In tough retail environments,agility is key,and this deal could allow them to navigate market challenges more effectively.
Editor: That makes a lot of sense. However, what are the risks Dia must be mindful of as they proceed with this new agreement?
dr.Fernandez: Well, while they have secured the refinancing, it is not without risks. the primary concern would be their ability to generate consistent revenue that meets the new financial obligations. If Dia cannot improve sales, they could find themselves in a similar or even worse position later.Furthermore, external factors such as competition, economic conditions, and consumer behavior will play significant roles. They will need to balance careful financial management with strategic growth initiatives to ensure long-term sustainability.
Editor: So, effectively, it’s a balancing act. Lastly, how does this situation reflect broader trends in the retail industry, especially with economic uncertainties looming?
Dr. Fernandez: Dia’s refinancing is emblematic of many retail businesses facing similar pressures. In the wake of economic fluctuations, companies are increasingly seeking flexible financing options to adapt quickly. The retail sector has been transforming dramatically—digital sales are rising, consumer preferences are shifting, and customary players need to evolve. This refinancing could serve as a case study for others in the industry grappling with debt and the need for innovation in their business models.
Editor: Engaging insights, Dr.Fernandez. It seems that Dia’s journey could potentially resonate across the retail landscape. Thank you for shedding light on this critically important development.
Dr. Fernandez: Thank you for having me. It’s been a pleasure to discuss these pressing issues in finance with you.
Editor: And to our viewers, thank you for tuning in. Stay informed as we continue to track this evolving story and its implications in the retail sector.
