Thai padding

5 December 2014 By Una Galani Follow @ugalani

The British supermarket wants to raise cash. Its business in Asia is healthy with good growth potential. If Tesco wants to retain control, listing 46 pct of its fast-growing Thai operations in Bangkok could raise 2 bln pounds. That’s enough to shore up the group’s balance sheet.

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Tesco said on Oct. 23 that it would favour the sale of assets and cost cuts before looking at a rights issue.

“We think that there is significant opportunities for us to extract value from the business that we have, either from the self help I talked around in terms of costs or dare I say it when we review the portfolio against whatever strategy we decide,” Chief Executive Dave Lewis told analysts. “We will go there first. We are not working on a rights issue today,” he added.

The British supermarket said that its profit guidance in August was misstated by 263 million pounds ($414 million), up from an original estimate of 250 million pounds.

In October 2013, Tesco agreed to fold its retail assets into a joint venture with China Resources Enterprise in which the British supermarket will hold a 20 percent stake. In January 2013, Tesco completed an exit from its Japan business.

Tesco’s Asia business generated 10.9 billion pounds in sales and 692 million pounds in adjusted operating profit in the year ended Feb 22. The Thai business generated sales of 3.8 billion pounds over the same period.

Net debt stood at 7.5 billion pounds as of Aug. 23 from 7 billion pounds a year earlier.

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