20 May 2019

LetterOne updates on DIA agreement


Latest updates available at Make DIA A Champion


Pursuant to article 226 of the consolidated text of the Securities Market Act and development regulation, L1R Invest1 Holdings S.à r.l. (“LetterOne”) hereby informs about and discloses the following:


  1. The Annual General Shareholders’ Meeting of Distribuidora Internacional de Alimentación, S.A. (“DIA”) held on 20 March 2019 approved a share capital increase with the purpose of increasing the equity of the company by an amount of EUR 500 million, delegating in favour of the Board of Directors the relevant faculties to implement the share capital increase resolution. In the context of such resolution, LetterOne committed to exercise its preferential subscription right pro rata to its percentage in the share capital of DIA, and to underwrite entirely the share capital increase, subscribing that part of the capital increase which is not subscribed by the rest of shareholders, or procure the underwriting by one or more financial entities.

  2. The implementation of the share capital increase and the underwriting commitment from LetterOne were subject to the fulfilment of three conditions precedent:

    (i)  the settlement of the public tender offer over 100% of the shares in DIA (the “Offer”);

    (ii)  an agreement being reached between DIA and its syndicated facility lenders, which allows for a restructuring or refinancing of the debt which guarantees its financial stability; and

    (iii)  the appointment of a majority of members of the Board of Directors as proposed by LetterOne.

  3. The imminent fulfilment of the first of the aforesaid conditions is an actual and certain fact. On Friday 17 May 2019, the National Securities Market Commission (the “CNMV”) officially announced that the Offer has 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, make LetterOne hold 69.76% of the share capital of DIA. The stock exchange transaction date is today, Monday 20 May 2019, and therefore, the Offer will be settled on Wednesday 22 May 2019.

  4. Regarding the fulfilment of the second of the aforesaid conditions, on the date hereof, LetterOne has reached an agreement (the “Lock-Up Agreement”) with all syndicated facility lenders which provides a path to a restructuring and refinancing of the existing syndicated bank debt of DIA, to establish the company’s financial stability. The terms and conditions of such agreement are detailed in a term-sheet attached to the Lock-Up Agreement. The most relevant terms of the term-sheet and the Lock-Up Agreement are summarised in Schedule 1 hereto.

  5. Regarding the third of the aforesaid conditions, LetterOne hereby publicly urges the Board of Directors of DIA to carry out immediately the relevant appointments which have been communicated to them, so that such condition is fulfilled.

  6. LetterOne acknowledges that:

    (i)  upon fulfilment of the aforesaid three conditions, the EUR 500 million share capital increase is sufficient to remedy the mandatory dissolution cause due to losses, since DIA’s net equity would be restored in accordance with article 363.1 e) of the Capital Companies Act; and

    (ii)  the share capital increase, together with the new facilities for an aggregate amount of EUR 380 million contemplated in the Lock-Up Agreement and related term-sheet, constitute a solution to the liquidity problems that DIA has been experiencing, and provide a viable long-term capital structure.

In light of the foregoing, LetterOne hereby urges the Board of Directors to abstain from taking any steps contemplated under the Insolvency Act, which would impede the implementation of all the aforesaid rescue measures, would be detrimental for shareholders, employees, financial creditors and suppliers of DIA, would be seriously adverse to the corporate interest of DIA, and consequently would constitute an action against the Law.

Luxembourg, 20 May 2019.

L1R Invest1 Holdings S.à r.l.


Mr. Tanel Saari