Top shareholder advisers have backed Aryzta's planned €800m capital raising, in a major boost to management ahead of a shareholders' meeting next month.
The Irish-Swiss company' biggest shareholder, Cobas, is against the plan and trying to build support for its stance.
However, so-called proxy advisers ISS, Glass Lewis and Ethos have all recommended that shareholder vote in favour of a €800m capital increase when it is put to an annual general meeting to be held on November 1 next.
Despite that backing Aryzta shares fell 5.5pc to €8 each yesterday. ISS reversed its own earlier course to come out in support of the Aryzta proposal, having initially opposed it.
That change of heart reflected the advisory firm's view that an alternative plan put forward by Cobas, featuring a €400m capital raise, would provide less certainty to shareholders - including because of the additional time needed to approve such a scheme and because it depends on the successful outcome of asset disposals, that are uncertain.
"A further delay in implementation in the event of negative news could send the stock into another negative loop, as shareholders would be unsure of timing of implementation," ISS noted.
Meanwhile, Glass Lewis said Aryzta's board and management had made a compelling case for their proposal.
"The company faces liquidity concerns and a crisis of confidence among key stakeholder groups, including existing and prospective customers and investors," Glass Lewis said.
The proxy advisers have also recommended approving Aryzta's executive pay deal, after modifications to the scheme over the past year. At the 2017 AGM close to half of Aryzta's shareholders opposed the pay deal, in a non-binding, but embarassing, vote.