Ocado seeks consents to waiver, amendment under 4% notes due 2024

By Marisa Wong

Los Angeles, July 12 – Ocado Group plc has begun a solicitation of consents from holders of its 4% senior secured notes due 2024 to a waiver and to proposed amendments of some restrictive covenants and other provisions contained in the indenture governing the notes, according to a notice.

The consent solicitation relates to a proposed joint venture between Ocado and Marks and Spencer.

On Feb. 27, Ocado, Ocado Holdings Ltd., Marks and Spencer Holdings Ltd. (M&S Holdings), Marks and Spencer Group plc and Marks and Spencer plc had entered into a share purchase agreement under which Ocado Holdings will dispose of 50% of Ocado’s U.K. retail business through the disposal of 50% of the entire issued share capital of Ocado Retail Ltd., which owns Speciality Stores Ltd., to M&S Holdings. The Ocado Retail sale will result in a 50/50 joint venture formed between Ocado Holdings and M&S Holdings.

The purpose of the consent solicitation is to (i) obtain waivers with respect to any breaches of covenants or other provisions in the notes indenture, and any related default or event of default, which may otherwise arise as a result of the joint venture transaction; and (ii) provide some additional flexibility for Ocado and its subsidiaries to engage in transactions with the joint venture on an ongoing basis.

The consent solicitation will expire at 11 a.m. ET on July 19.

Adoption of the waiver and proposed amendments requires consents from holders of a majority in aggregate principal amount of outstanding notes.

If the necessary consents are received, the company will execute a supplemental indenture. The waiver and the proposed amendments will become effective upon execution but will only become operative when the Ocado Retail sale closes.

Holders may revoke their consents prior to the earlier of the effective time of the supplemental indenture and the expiration time of the consent solicitation.

The company is offering a consent fee of £2.50 per £1,000 principal amount.

The consent fee will be paid if the necessary consents are received by the expiration time, a supplemental indenture has been executed, the Ocado Retail sale has been completed and all other conditions to the consent solicitation have been satisfied. The company expects to pay the consent fee no later than closing of the Ocado Retail sale, which is currently slated for Aug. 5.

If the company does not receive the required consents or the consent solicitation is terminated, the waiver and proposed amendments will not become operative and no consent fee will be paid. Instead, the company plans to redeem the notes using in part proceeds from the Ocado Retail sale.

Goldman Sachs International (+44 20 7552 6157 or liabilitymanagement.eu@gs.com) is acting as the solicitation agent, with Lucid Issuer Services Ltd. (+44 20 7704 0880 or ocado@lucid-is.com) as the tabulation and information agent.

Ocado is a Hatfield, U.K.-based supermarket company. Marks and Spencer is a London-based multinational retailer of clothing, home products and food.

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