OCADO’S shareholders ploughed more money into the online grocery chain yesterday to support a £36m placing that will keep the firm financially stable for at least 18 months.
Existing shareholders including Jorn Rausing of the Tetra Pak dynasty and Ocado’s management team took up around 19 per cent of the shares placed, in line with their current holdings, advisers said.
The fundraising was part of a deal with lenders that will see Ocado’s debt facility extended, giving the loss-making firm breathing space to open a second warehouse in Warwickshire.
Ocado said Barclays, HSBC and Lloyds have agreed to extend its £100m capital expenditure facility for an extra 18 months to July 2015.
It said the placing was “much a planned strategy” and denied that it had been in danger of breaching covenants tests due in December.
Shares in the retailer, which have nearly halved in the past six months over fears it could breach its banking covenants, soared more than 23 per cent yesterday.
But analysts remained doubtful over its long-term prospects. Shore Capital analyst Clive Black said the use of a cash-box placing “shows the constraints that Ocado is facing.”
Black described the 11 per cent sales growth Ocado posted for the 14 weeks to 11 November as “unspectacular” compared to its bricks and mortar rivals, with the group still failing to generate sufficient cash.
NUMIS Securities and Goldman Sachs acted as joint bookrunners on Ocado’s share placing. The teams were led by Alex Ham, co-head of corporate broking at Numis and Phil Raper, head of UK equity capital markets and chairman of corporate broking at Goldman Sachs.
Ham, 29, has worked at Numis since 2005, and has worked with Ocado before, helping to secure the 10 per cent cornerstone investor needed in the online grocer’s IPO fundraising in 2010.
Ham also ran Numis’ involvement in the flotation of Hugh Osmond’s cash shell Horizon on the Alternative Investment Market in February 2010, and in 2011 acted for Horizon on its £527m acquisition of temporary power provider APR Energy, which was then reversed into the cash shell.
He also advised Betfair on its flotation in 2010 and New-York based Investcorp on its bid for Opsec, the maker of anti-counterfeiting technologies last year.
Ham, who was named rising star of the year at the 2011 City A.M. Awards, is also a senior adviser on corporate broking and equity capital markets to online fashion retailer Asos, global software firm Micro Focus and student accommodation group Unite.