Jun 12, 2017

Ocado looks to raise £350m for expansion through bond sale

UK online grocer Ocado plans to raise £350m through a bond issue and changes to its credit arrangements to fund expansion of its facilities and develop its automated warehousing technology. Ocado said it planned to raise £200m through senior secured notes, with a further £150m through an amended revolving credit facility - increasing the total credit it would have access to by £140m. Bruno Monteyne, an analyst at Bernstein, said the capital raising confirmed his pessimistic view of the company's prospects. Ocado "Is having to raise financing to fund further growth, orders per week is slowing down and ebitda is in line with our bear expectations", he said. Shares in the group closed down 6.7 per cent at 270.5p. In a memorandum to bond investors, Ocado said £94.5m of the proceeds would be spent on expanding warehouse capacity in Erith and Andover, as well as developing its technology. Its partner will pay for website software and other technology, but is yet to commit to buying the automated mechanical handling equipment that Ocado has touted as its most valuable innovation.

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