SUPERMARKET giant J Sainsbury unveiled plans to raise £445m to fund its expansion yesterday, sending its shares plummeting over five per cent on dilution fears.<br /><br />Chief executive Justin King said the firm will add 50 new stores over the next two years and extend between 30 and 35 stores, resulting in a 15 per cent retail space expansion, compared to the 10 per cent it had previously forecast. <br /><br />The new plans will add 2.5m square feet in retail space to its existing 16m square feet.<br /><br />However, some analysts said the size of the fundraising suggested that the grocer had more ambitious growth plans. <br /><br />King said the cash call, made up of a £255m rights issue and £190m bond issue, will let the firm grow “further and faster”. It is thought the issue will be priced at around 310p.<br /><br />The cash call came as King said first quarter like-for-like sales excluding fuel were up seven per cent, rising to 7.8 per cent when factoring in changes to VAT.<br /><br />“Customer numbers have increased to over 18.5m a week. Customers are spending more cautiously but continue to look to trusted brands,” added King.<br /><br />Shore Capital analyst Darren Shirley said the share placing and bond issue will be “dilutive to earnings in the short term”. <br /><br />Shares in the grocer closed 19p down at 313p.