Ocado seeks to raise £350m for its expansion

 
Helen Cahill
Follow Helen
20th Anniversary Of First Online Sale
Ocado signed its first international technology deal recently (Source: Getty)

Online grocer Ocado today announced it is issuing bonds and making changes to its banking facilities with the aim of raising £350m to support its growth.

In particular, Ocado wants to increase the capacity of its service and improve its software platform.

Read more: Ocado's shares spike on news of deal with international retailer

Bolstering its in-house technology is a key part of Ocado's growth strategy as it makes money from leasing out the platform to other retailers such as Morrisons.

The retailer also announced its figures for the 22 weeks to 30 April. Gross sales were up 25 per cent to £600.4m, and profit before tax jumped 46 per cent to £6.7m.

However, the figures received an artificial boost from the fact that Ocado compared the 22 weeks to a 20-week period in 2016.

Ocado is intending to raise £200m through senior secured notes. The additional £150m will come from the amendment and extension of the firm's revolving credit facility.

Read more: Middle-class nirvana: M&S and Ocado could explore plan for new tie-up

"These financing transactions are intended to extend the maturity profile of Ocado's debt and diversify its sources of funding," Ocado said in a statement.

"The board believes that with its continued strong trading, increased scale and profitability, Ocado can benefit from the historically low financing costs in the public debt markets to put in place longer maturity financing on attractive terms."

Following the announcement, Ocado's share price was down 3.1 per cent at 280p.

Related articles