Ocado investors prop up 36m capital raisingKASMIRA JEFFORDCity AM
OCADO'S shareholders ploughed more money into the online grocery chain yesterday to support a 36m placing that will keep the firm financially stable for at least 18 months. Existing shareholders including Jorn Rausing of the Tetra Pak dynasty and Ocado's management team took up around 19 per cent of the shares placed, in line with their current holdings, advisers said.
The fundraising was part of a deal with lenders that will see Ocado's debt facility extended, giving the lossmaking firm breathing space to open a second warehouse in Warwickshire.
Ocado said Barclays, HSBC and Lloyds have agreed to extend its 100m capital expenditure facility for an extra 18 months to July 2015.
It said the placing was "much a planned strategy" and denied that it had been in danger of breaching covenants tests due in December.
Shares in the retailer, which have nearly halved in the past six months over fears it could breach its banking covenants, soared more than 23 per cent yesterday.
But analysts remained doubtful over its long-term prospects. Shore Capital analyst Clive Black said the use of a cash-box placing "shows the constraints that Ocado is facing."
Black described the 11 per cent sales growth Ocado posted for the 14 weeks to 11 November as "unspectacular" compared to its bricks and mortar rivals, with the group still failing to generate sufficient cash.