Tesco Shares Extend Decline on Concern of Rights OfferingPaul Jarvis
Tesco Plc shares extended recent losses in London amid speculation that the U.K.’s biggest retailer may be considering a sale of new stock.
A rights offering of about 3 billion pounds ($4.8 billion) is among options being considered, the Financial Times’s Alphaville blog said today, citing no-one. A company spokesman said Cheshunt, England-based Tesco has no “current plans” to seek funding through that method.
The shares fell as much as 4.5 percent to 170.15 pence in London, the lowest since March 2003. The stock has slumped about 25 percent since the company said Sept. 22 that it started a probe of accounting practices and suspended four executives after overstating its first-half profit estimates.
“It’s not impossible” that Tesco may consider selling shares to strengthen its finances, “but there are plenty of other options,” said Darren Shirley, an analyst at Shore Capital in London. “It could raise plenty of money from selling some of its very profitable international businesses like Thailand.”
Tesco is unlikely to rush into any decision on selling assets or a rights offering, according to Shirley, saying he doesn’t expect any decision before the first quarter.
Tesco is scheduled to publish its delayed first-half results on Oct. 23.
The shares traded at 173.4 pence as of 2:55 p.m. in London, down 2.4 percent from yesterday’s closing price and valuing the company at 14.1 billion pounds.