Ocado Group PLC has announced the launch of a proposed Convertible Bond Offering, aiming to raise approximately 250 million. Concurrently, the company also intends to offer 350 million in aggregate principal amount of sterling-denominated senior unsecured notes due 2029, with the combined offerings expected to raise total gross proceeds of approximately 600 million. The Convertible Bond Offering will be offered via an accelerated bookbuild to institutional investors, with the final terms expected to be announced at the end of the bookbuild.
The net proceeds from the offerings, along with cash from the balance sheet, are intended to fund a Tender Offer to the holders of Ocado's outstanding 0.875% senior unsecured convertible bonds due 2025 and 3.875% senior unsecured notes due 2026. Any excess proceeds are expected to be retained by Ocado to reduce leverage over time. The purpose of these financing transactions is to proactively extend the maturity profile of Ocado's debt and maintain a healthy financial profile to enable investment in the company's growth plans.
Ocado reported strong H1 earnings, demonstrating financial, operational, and strategic progress, with revenue growth of 1.5 billion, up +12.6%. The company also reported a raise in FY24 margin guidance to mid-teens percentage and an improvement in underlying cash flow. Ocado remains focused on making continued progress, as evidenced by a new order from Kroger to install its latest proprietary automation across multiple Customer Fulfilment Centres in the United States.
The Bonds will be issued by Ocado and initially guaranteed by several entities, carrying a coupon of between 5.75% and 6.25% per annum. They will be convertible into ordinary shares in the capital of the Company, with the initial conversion price expected to be set at a premium of between 45% and 50% above the clearing price of an existing Ordinary Share determined in the concurrent Delta Placement. The Joint Global Coordinators will organize a simultaneous placement of existing Ordinary Shares to facilitate hedging for certain subscribers of the Bonds.