UK Supermarket J. Sainsbury To Raise New Capital

LONDON (AP) — J Sainsbury PLC said Wednesday it will seek to raise 445 million pounds ($732 million) in new capital by issuing shares and debt to fund expansion of its British supermarkets.

Sainsbury, Britain's third-largest supermarket group behind Tesco PLC and Wal-Mart's Asda stores, said it would place 255 million pounds of new shares and offer 190 million pounds of convertible bonds to support its plan to expand store space by 15 percent in the next two years.

"The fund-raising announced today will provide us with the financial flexibility to take advantage of current opportunities to grow our business further and faster," said Chief Executive Justin King.

The announcement came as Sainsbury said comparable sales were up 2.5 percent in the 12 weeks ending June 13, or up 7.8 percent excluding sales of fuel and adjusting for changes in the sales tax.

Sainsbury shares were down 6.7 percent at 309.5 pence on the London Stock Exchange.

Jonathan Jackson, analyst at Killik & Co., said he remained cautious about Sainsbury shares which are trading at a higher multiple to earnings than those of Tesco, the market leader.

Still, Sainsbury had reaped better-than-expected sales from recent new store openings and store extensions, he noted, and the cash call "comes at a time when there are an increasing number of opportunities within the property market and deflation in build and fit-out costs."

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On the Net: http://www.j-sainsbury.co.uk