* Lending banks extend 100 mln stg facility to 2015
* Placing to raise 36 mln stg
* Q4 sales growth accelerates to 11 pct
* Shares rise as much as 32 pct
By James Davey
LONDON, Nov 19 British online grocer Ocado
said it will raise 36 million pounds ($57 million)
through a placing of new shares as part of a deal with lenders
that will see its debt facility extended.
Ocado shares, which nearly halved in the past six months on
fears it could breach its banking agreements, leaped as much as
32 percent on Monday as investors bet the new lending deal would
give management more time to prove its business model can work.
The stock was up 15.05 pence at 75.6 pence at 1130 GMT,
valuing the business at 392 million pounds.
The firm, founded in 2000 by three former Goldman Sachs
bankers and floated at 180 pence a share in 2010, has polarised
opinion like few other market debutants.
Fans point to rapid growth in online grocery sales and high
customer service ratings. Sceptics say its model of filling
orders from central depots will never be as profitable as online
operations at established grocers, which mostly pick orders in
store and are seeing faster online sales growth than Ocado.
"Ocado is still operating an inefficient model, growing
below City expectations and its multichannel competitors," said
Panmure Gordon analyst Philip Dorgan, a long-time Ocado bear.
"That said, the monkey is off their back and management now
has considerable breathing space."
Chief Executive Tim Steiner denied the firm would have
breached its banking covenants if it had not agreed a new deal
with banks. "100 percent categorically we would not have
breached the agreements," he told Reuters.
Ocado, whose range includes products supplied by upmarket
grocer Waitrose, said existing lenders Barclays
, HSBC and Lloyds, had agreed to
extend the maturity of its existing 100 million pounds capital
expenditure facility by 18 months to July 2015.
SALES GROWTH PICKS UP
Chief Financial Officer Duncan Tatton-Brown said covenants
on the new deal were fundamentally the same as the previous deal
for 2013 and would become less onerous in subsequent years.
The lending deal is conditional upon Ocado placing 55.9
million new shares representing 9.99 percent of existing
capital, to existing shareholders, at 64 pence a share - a
premium of 5.7 percent to Friday's closing price of 60.55 pence.
Ocado said a wide spectrum of large shareholders, including
board members such as Steiner, would be backing the placing.
Ocado's gross sales rose 11 percent in the 14 weeks to Nov.
11 and were up 13.7 percent in the last six weeks of the period,
as the firm benefited from the extension of its range towards
30,000 lines and the introduction of its "Low Price Promise".
Sales growth had slowed to 9.9 percent in the third quarter
after trade was impacted by celebrations to mark Queen
Elizabeth's Jubilee and the London Olympics.
"The chitter chatter in the market has been that we're
seeing declining growth... What this (statement) is highlighting
is not only has the quarter been stronger than the previous
quarter but as we predicted it was going to be a back-ended
quarter which is actually the most important point of the year,"
He said he expected stronger sales growth until February
next year when the firm will start to fulfil customer orders
from a second distribution centre. After February he anticipates
a further acceleration, as marketing is stepped-up and the
firm's non-food offer expanded.