You are here: News / Ocado can count on its backers yet again
Ocado can count on its backers yet again
Archived article dated Thursday October 2nd 2008
There has been much talk in the markets about covenants being breached and businesses having to go to the market to refinance their debt at significantly worse rates than those previously enjoyed.
By Glynn Davis
Topps Tiles and JJB Sports are two names that have both recently been through this painful process.Debenhams is another major player that is continually discussed in the media as under pressure as a result of its large debt load. Meanwhile, over at Kingfisher Ian Cheshire chief executive recently made the point (with some relief) that he would not have to visit the banks again to discuss borrowings etcetera until 2012. Clearly by this time he is hoping that the current meltdown will have become history.
Another player that has been up against it financially since the day it was created is home delivery business Ocado. It's a great proposition that undoubtedly delivers a superior level of customer service to that of any of its key rivals but it has had to ask its backers to annually dig into their pockets to provide additional funding in order to keep it in business while it crawls ever closer to profitability.
It is due to issue its next cash call later in the year for a further £20 million to help it pay down its debt. Having so far chipped in £277 million, across six rounds of fundraising, Ocado's investors are probably in the position where they have little option but to throw in yet more funds.
To quibble over a few million when hundreds of millions have been thrown into the pot would be very painful. It reminds me somewhat of the old adage: if you owe the bank a million then it is your problem, but if you owe them a 100 million then it is the banks' problem.
glynnd@theretailbulletin.com
Tagged as: glynn davis | viewpoint | ocado | covenants
Share this article:
Should your colleagues be reading the Retail Bulletin?
Let them know about us.
