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Ocado Group PLC

Ocado Group Convertible Bond Offering

Ocado Group (LON:OCDO) has announced the launch of an offering of approx. £500 million of guaranteed senior unsecured Convertible Bonds due 2025.

The net proceeds of the issue of the Bonds will be used to fund capital expenditure in relation to Ocado Solutions’ commitments and general corporate purposes. The Offering enables Ocado Group to diversify its funding sources and capitalise on attractive issuance conditions.

The Bonds will be issued by Ocado Group and initially guaranteed by Ocado Operating Limited, Ocado Innovation Limited, Ocado Central Services Limited, Ocado Solutions Limited and Ocado Holdings Limited (the “Guarantors”), with the Guarantors subject to change in certain circumstances.

The Bonds will be issued at par and are expected to carry a coupon of between 0.75% and 1.25% per annum payable semi-annually in arrear on 9 June and 9 December in each year, with the first interest payment date being 9 June 2020. The Bonds will be convertible into ordinary shares of the Issuer (the “Ordinary Shares”). The initial conversion price is expected to be set at a premium of between 40.0% and 45.0% above the volume weighted average price (VWAP) of an Ordinary Share on the London Stock Exchange between opening and pricing of the Offering on 2 December 2019. The conversion price will be subject to adjustment in certain circumstances in line with market practice.

Settlement and delivery of the Bonds is expected to take place on or about 9 December 2019 (the “Closing Date”). If not previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed at par on 9 December 2025. The Issuer will have the option to redeem all outstanding Bonds on or after 30 December 2023, at par plus accrued interest, if the parity value on each of at least 20 dealing days in a period of 30 consecutive dealing days shall have exceeded 130% of the principal amount.

The Issuer will also have the option to redeem all outstanding Bonds, at par plus accrued interest, at any time if 85% or more of the principal amount of the Bonds shall have been previously converted or repurchased and cancelled.

The final terms of the Bonds are expected to be announced later today.

Application is intended to be made for the Bonds to be admitted to trading on the unregulated open market (Freiverkehr) of the Frankfurt Stock Exchange after the Closing Date but prior to the first interest payment date.

In the context of the Offering, the Issuer will agree to a lock-up relating to equity and equity-related securities for a period commencing on pricing and ending 90 calendar days following the Closing Date, subject to certain exceptions.

Goldman Sachs International and J.P. Morgan Cazenove are acting as Joint Bookrunners for the Offering.

Update on Ocado Retail Ltd 

In the 13 weeks to 1 Dec 2019, we expect Retail Revenue growth of 10-11%, with growth in orders including those for Ocado Zoom slightly higher than Retail Revenue growth.