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Ocado (OCDO) has announced the launch of a £500m corporate bond offering to help fund the global expansion of its Ocado Solutions business.
Ocado said net proceeds of the issue of the Bonds will be used to fund capital expenditure in relation to Ocado Solutions’ previously announced partnerships and commitments and general corporate purposes.
It said the offering enables Ocado Group to diversify its funding sources and capitalise on “attractive issuance conditions”.
The bonds will be due for repayment in 2025 and will carry a coupon of between 0.75% and 1.25% per annum.
The bonds will be convertible into ordinary shares. The initial conversion price is expected to be set at a premium of between 40.0% and 45.0% above the volume weighted average price of Ocado’s ordinary shares on 2 December.
The Issuer will have the option to redeem all outstanding Bonds on or after 30 December 2023, at par plus accrued interest or if at any time 85% or more of the principal amount of the bonds have been previously converted or repurchased and cancelled.
Meanwhile, Ocado has issued a brief trading update for its Ocado Retail arm – the UK-based joint venture with Marks & Spencer (MKS).
In the 13 weeks to 1 Dec 2019, it expects retail revenue growth of 10-11%, with growth in orders including those for Ocado Zoom slightly higher than retail revenue growth.
Ocado shares have opened down 5.2% to 1,255p this morning on the news.
Morning update
The FTSE 100 has started the week on the front foot, climbing 0.8% to 7,397.8pts so far this morning.
Early risers include Imperial Brands (IMB), up 1.8% to 1,733.8p, British American Tobacco (BATS), up 1.7% to 3,110.5p and Reckitt Benckiser (RB), up 1.1% to 6,135p.
Ocado apart, fallers so far this morning include Mothercare, down 2.5% to 12.75p, Pets at Home, down 1.2% to 249p and Mitchells & Butlers (MAB), down 0.9% to 445p.
This week in the City
December kicks off with a quieter week in the City calendar.
Wednesday brings full year earnings from Eastern Europe-focussed spirits group Stock Spirits (STCK).
Thursday will see the release of interim earnings from packaging giant DS Smith (SMDS), while US grocery giant Kroger also releases third quarter results.
Primark owner Associated British Foods will host its AGM on Friday.
In economic news, this week brings the monthly PMI updates on manufacturing, construction and services.
The November BRC-KPMG Retail Sales figures will be published tomorrow morning, while the FTSE 100 quarterly review takes place on Wednesday.
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