Ocado finds time and money

Online grocer Ocado said it had secured more time to pay off debts and would raise 35.8 million pounds through a placing of shares.

The firm said it would use the extra time and money to increase its ranges, improve the customer experience and go on a marketing drive.

The company's existing lenders, Barclays, HSBC and Lloyds, have agreed to extend the maturity of Ocado's existing £100m capital expenditure facility for a further 18 months until July 2015.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The extended facility now comprises a capex term facility of £90m and a working capital revolving credit facility of £10m.

The firm will also place almost 56m new shares with investors, at the 64p per share.

This represents around 10% of the company's existing issued share capital and is priced at premium of 5.7% to the closing middle market price of 60.55p per ordinary share on November 16th.

Chief Financial Officer Duncan Tatton-Brown said the firm had made the moves so it could deliver growth through increasing its range and enhancing customers' shopping experience.

"It also gives us greater flexibility to invest in various marketing initiatives around the opening of [second distribution centre] CFC2 and significantly expand our non-food offering," he said.

The firm also noted a jump in trading levels in recent weeks.

For the 14 weeks to November 11th, Ocado posted year-on-year growth in gross sales of 11%.

Trading accelerated over the last six weeks, with the company reporting year-on-year growth of 13.7%.

Weekly orders reached 140,000 per week for the first time in November, it said.

The company added it has completed construction of CFC2 in Dordon, with equipment installation almost complete, and testing underway since May 2012.

The project remains in line with budget and, subject to the successful completion of testing, fulfillment of customer orders from CFC2 is planned to begin in February 2013.

Ocado expects to incur the final £46m of capital expenditure during 2013.