In October 2018, it became clear that DIA was undergoing serious financial difficulties. In February 2019, L1 Retail, which owned 29% of the company at the time, announced a voluntary tender offer and comprehensive rescue plan to secure the future of DIA.
L1 Retail believed that under the right leadership and governance, DIA could deliver a transformation and re-establish its position in the Spanish retail market to the benefit of the Spanish consumer.
The L1 Retail rescue plan consisted of three integrated components. First, a voluntary tender offer (“VTO”) for the acquisition of all the shares in DIA that it did not already own at a price of €0.67 per share, a significant premium of 56.1% to the closing price on 4 February 2019. Second, a commitment to support a capital increase of up to €500m to achieve a viable long-term capital structure, which was conditional upon the completion of the VTO and reaching a satisfactory agreement with DIA’s lending banks. Third, a comprehensive transformation plan, led and overseen by L1 Retail, which was and is expected to deliver a turnaround of the business over a 3-5 year period.
On 17 May 2019, the National Securities Market Commission (the “CNMV”) officially announced that the offer had been accepted by a number of shares representing 40.76% of the share capital of DIA, which, together with those shares held by LetterOne before the offer, made L1 Retail a holder of 69.76% of the share capital of DIA. In November 2019, the DIA rescue plan was concluded with a capital increase of €605m, including take-up of €149m by the market. LetterOne’s interest increased to 74.82% after the November 2019 capital increase.
On 5 August 2021, DIA completed a further capital increase in the amount of €1,028m as part of the comprehensive debt agreement with the syndicate of lenders essentially extending the maturity of the Senior Facilities to December 2025. The capital increase also reinforced DIA’s net equity, significantly reduced its financial indebtedness position and increased its liquidity with a cash tranche of €259m provided principally by the market. LetterOne participation moved to 77.70% post capital increase. This successful capital increase reflected the financial markets’ endorsement of DIA and the L1 Retail-led turnaround plans, underlining stakeholders’ confidence in DIA’s future.