Swiss fragrance and flavour supplier Givaudan has issued nearly a million new shares, in an attempt to pay off some of the debt from purchasing Quest.
The company plans to raise CHF 420m (€278m) through the rights issue of 999,624 new shares.
According to Givaudan’s board of directors the move is an attempt to de-leverage the balance sheet in uncertain economic times.
It claims the move will help the company to pursue strategies to drive growth and profitability.
The company took on a debt of CHF1.9bn to purchase Quest back in March 2007 and said it plans to use the net proceeds from the sale of the shares to repay some of this debt.
Givaudan also announced further details of its first quarter performance to complement the sales update published in April.
Sales dipped in Q1
Sales for the first quarter dropped 2.6 per cent in local currencies and 7.3 per cent in Swiss francs. Fragrance suffered in particular with a decline of 10.4 per cent in Swiss francs, whereas flavours remained fairly steady with a 0.8 per cent decline.
At the time the figures were published the company stated that an instant recovery of the fragrance market was not likely.
“Lack of consumer confidence and reduced travel activity is likely to continue impacting fine fragrance sales throughout 2009,” it said in a statement.
Consolidated operating income for the first quarter was CHF110m, which the company said reflected high raw materials costs purchased in 2008.
As the company usually publishes these figures at 6 monthly intervals, comparisons with previous year figures are not possible.