Capital raising announcement

RNS Number : 0225U

Sainsbury(J) PLC

17 June 2009

 



17 June 2009    

THIS ANNOUNCEMENT IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR IN ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES WOULD BE PROHIBITED BY APPLICABLE LAW

Sainsbury's announces capital raising to accelerate growth plans

• Capital raising of approximately £445 million via a placing of new shares (c. £255 million) and an offering of convertible bonds (c. £190 million)

• Proceeds used to accelerate Sainsbury's growth; 15 per cent space growth by March 2011

• Strong sales growth with like-for-like sales excluding fuel and VAT up 7.8 per cent (1)

• Agreement to acquire a further nine stores from the Co-Operative Group, in addition to the 24 stores already acquired

J Sainsbury plc ('Sainsbury's' or the 'Company') today announces its intention to raise around £445 million via a placing (the 'Placing') of new ordinary shares (the 'Placing Shares') and an issue of convertible bonds due 2014 (the 'Offering'). The proceeds from these capital raisings will be used to enable Sainsbury's to accelerate its 'From Recovery to Growth' strategy, increasing its planned gross space growth over the next two years (to March 2011) from 10 per cent to 15 per cent. Sainsbury's will add 2.5 million sq ft of additional selling space by March 2011.

Today Sainsbury's has also provided an update on trading for the 12 weeks to 13 June 2009, delivering strong like-for-like sales growth of 7.8 per cent (1) through increased customer numbers and continued growth in basket size; and announces the agreement to acquire nine stores from the Co-operative Group for a total consideration of £29 million. The acquisition of these stores is in addition to the 24 stores already acquired from the Co-operative Group for £83 million as announced on 4 March 2009.

Commenting on the capital raising, Sainsbury's chief executive, Justin King said: 'Over the past four years we have reinvigorated our business and demonstrated the strength of Sainsbury's brand with 18 consecutive quarters of like-for-like sales growth. 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. We can speed up our growth in areas of lower market share, maintain the strength of our balance sheet and invest in the long-term growth of the business.'

Use of proceeds

Sainsbury's 'From Recovery to Growth' strategy, outlined in May 2007, has successfully delivered strong growth over the last two years. In the first quarter of 2009/10, Sainsbury's has delivered like-for-like sales growth, excluding fuel, of 7.8 per cent (1). Sainsbury's continues to demonstrate the success of its universal customer appeal through increasing levels of customer transactions, despite the current challenging economic conditions. Sainsbury's non-food offering has continued to deliver good growth with strong like-for-like sales growth supported by additional space.

Sainsbury's has the potential to accelerate its growth plans significantly by taking advantage of attractive opportunities within the current property market. In addition, Sainsbury's is seeing more favourable conditions for increasing space growth due to reduced build and fit-out costs. Recent new store openings and store extensions have delivered better than expected returns and Sainsbury's has exceeded its own plans to grow supermarket space. 

Sainsbury's has a strong balance sheet which is well supported by significant property assets and long-term debt.  The capital raising announced today will maintain this strong position and give the Company the financial flexibility to increase its capital expenditure to £2 billion over the two years to March 2011. This will enable Sainsbury's to open extra space in the next two years, adding at least 15 per cent gross space, equating to 2.5 million sq ft of additional selling area, by March 2011 through:

• Acquiring additional freehold and long leasehold sites to open more new stores and to further develop the pipeline of future store openings, taking advantage of current opportunities in the property market; 

• Speeding up the development of the store estate through extensions, driving additional non-food ranges and improving the food offering; and

• Continuing the accelerated growth plans for the convenience estate, as previously announced, with plans for fifty new stores in 2009/10 and a further 100 stores in 2010/11.

The additional new space will increase sales growth in 2010/11, but will be slightly dilutive to earnings in the current financial year and 2010/11 as a result of the incremental interest and pre-opening costs.

Placing of new shares

Sainsbury's intends to issue new ordinary shares of 28 4/7 pence each in the Company, to raise approximately £255 million, subject to the terms and conditions set out in the Appendix of the Placing Agreement, at a price (the 'Placing Price') to be determined at the close of the bookbuilding process (the 'Bookbuild') and announced shortly thereafter. 

Demand for the Placing Shares, together with the Placing Price, will be determined through the Bookbuild. The number of Placing Shares and the Placing Price will be decided at the close of the Bookbuild and an announcement will be made as soon as practicable thereafter. The Bookbuild will be launched immediately following this announcement by Morgan Stanley & Co. International plc ('Morgan Stanley') and UBS Limited ('UBS' or 'UBS Investment Bank'), who are acting as joint bookrunners (the 'Joint Bookrunners'). The timing for the close of the Bookbuild, pricing and allocations is at the absolute discretion of the Joint Bookrunners. 

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of Sainsbury's, including the right to receive all dividends and other distributions declared, made or, with the exception of the final dividend for the financial year to 21 March 2009, paid after the date of the issue. The existing ordinary shares trade without the right to Sainsbury's final dividend of 9.6p per share declared on 13 May 2009 (payable on 17 July 2009 to those shareholders on the register at the close of business on 22 May 2009) and, as a result, the Placing Shares will not carry the right to this dividend. Application will be made for the Placing Shares to be admitted to the Official List of the Financial Services Authority ('FSA'), and to be admitted to trading by the London Stock Exchange plc (the 'London Stock Exchange') on its main market for listed securities (together 'Admission'). Settlement of payment for the Placing Shares issued pursuant to the Placing, as well as Admission, is expected to take place on Monday, 22 June 2009 (the 'Closing Date'). The Placing is conditional on Admission becoming effective.

By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this announcement in its entirety (including the Appendix) and to be making such offer on the terms and conditions contained herein and to be providing the representations, warranties and acknowledgements contained in the Appendix to this announcement.

Your attention is drawn to the detailed terms and conditions of the Placing described below.

Offering of convertible bonds

Sainsbury's also announces that it intends to make an offering of approximately £190 million principal amount of convertible bonds due 2014 (the 'Bonds') which will be convertible into new and/or existing ordinary shares of Sainsbury's. The issue of the Bonds is conditional on the Placing Shares having been issued. 

The Bonds will be convertible into fully paid new and/or existing ordinary shares of Sainsbury's ('Shares') and are expected to have a coupon in the range of 4.75-5.25% per annum payable semi-annually in equal instalments in arrear and an expected initial conversion price at a premium of 30-35% per cent above the Placing Price. The Bonds will be issued at 100% of their principal amount and, unless previously redeemed, converted or purchased and cancelled, will mature on the fifth anniversary of the issue of the Bonds in 2014. The Company will have the option to call the Bonds after the first three years, should the then volume weighted average price of the Shares be at least 130% of the then prevailing conversion price over a specified period. The final terms of the Bonds are expected to be announced today.

Settlement and delivery of the Bonds is expected to take place no later than 16 July 2009 (the 'Issue Date'). A further announcement will be made prior to admission to trading of the Bonds.

Applications will be made to the FSA in its capacity as competent authority (the 'United Kingdom Listing Authority') under the Financial Services and Markets Act 2000 ('FSMA') for the Bonds to be admitted to the Official List of the United Kingdom Listing Authority and to the London Stock Exchange for the Bonds to be admitted to trading on the London Stock Exchange's Professional Securities Market. Listing particulars will be prepared in connection with the listing of the Bonds.

Under the terms of the Offering, there will be a lock-up period ending 60 days after the Issue Date (both dates inclusive) on issuances or sales of shares or equity-linked securities by the Company, subject to certain customary exceptions.

Morgan Stanley and UBS are acting as Joint Bookrunners for the Placing and Morgan Stanley, UBS and Barclays Bank PLC ('Barclays Capital') are Joint Bookrunners for the Convertible Bond Offering.

(1)  Like-for-like sales growth for the 12 weeks ended 13 June 2009. Like-for-like sales are Easter adjusted, excluding fuel and excluding VAT.  Sales growth has been Easter-adjusted for comparative purposes. 2009/10 included a Good Friday trading week and an Easter Sunday trading week in the first quarter, whereas 2008/09 only included an Easter Sunday trading week.

Contacts:

Investor Relations                            Media

Elliot Jordan                                       Pip Wood  

[phone]                        [phone]

Morgan Stanley                     UBS Investment Bank        Barclays Capital

Alisdair Gayne                                Hew Glyn Davies                     Jim Ruffell

Jon Bathard-Smith                         Scilla Grimble                            Simon Ollerenshaw

Antoine de Guillenchmidt               Christopher Smith                     Nick Smith

                                                       James Eves

[phone]                        [phone]                     [phone]

  This announcement contains (or may contain) certain forward-looking statements with respect to certain of Sainsbury's plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. Sainsbury's cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as 'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', or other words of similar meaning. Examples of forward-looking statements include, amongst others, statements regarding Sainsbury's future financial position, business strategy, estimates of expenditure, and plans, dividend growth and objectives for future operations of Sainsbury's and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic and global economic and business conditions, the effects of continued volatility in credit markets, market-related risks such as changes in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards ('IFRS') applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of any pending and future litigation or regulatory investigations, the success of future acquisitions and other strategic transactions and the impact of competition - a number of which factors are beyond Sainsbury's control. As a result, Sainsbury's actual future results may differ materially from the plans, goals, and expectations set forth in Sainsbury's forward-looking statements. Any forward-looking statements made herein by or on behalf of Sainsbury's speak only as of the date they are made. Except as required by the Financial Services Authority (the 'FSA'), the London Stock Exchange or applicable law, Sainsbury's expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in Sainsbury's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. 

This announcement is for information purposes only and shall not constitute an offer to buy, sell, issue, or subscribe for, or the solicitation of an offer to buy, sell, issue, or subscribe for any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This announcement has been issued by and is the sole responsibility of Sainsbury's.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by either Morgan Stanley & Co. International plc ('Morgan Stanley') or UBS Limited ('UBS' or 'UBS Investment Bank') or Barclays Bank PLC ('Barclays Capital') or by any of their respective affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Each of Morgan Stanley, UBS and Barclays Capital are acting for Sainsbury's and for no-one else in connection with the Placing and/or the Offering, and will not be responsible to anyone other than Sainsbury's for providing the protections afforded to clients of Morgan Stanley or UBS or Barclays Capital, respectively, or for providing advice to any other person in relation to the Placing or the Offering or any other matter referred to herein. 

The distribution of this announcement and the offering of the securities in certain jurisdictions may be restricted by law. No action has been taken by Sainsbury's or Morgan Stanley, UBS or Barclays Capital that would permit an offering of such securities or possession or distribution of this announcement or any other offering or publicity material relating to such securities in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by Sainsbury's and Morgan Stanley, UBS and Barclays Capital to inform themselves about, and to observe such restrictions.

These forward-looking statements speak only as of the date of this announcement. The information and opinions contained in this announcement are subject to change without notice and, subject to compliance with applicable law, Sainsbury's assumes no responsibility or obligation to update publicly or revise any of the forward-looking statements contained herein. The price of securities and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the securities.

Members of the public are not eligible to take part in the placing of securities described in this announcement. This announcement (including the appendix) and the terms and conditions set out herein are for information purposes only and are directed only at: (a) persons in Member States of the European Economic Area who are Qualified Investors (as defined in article 2(1)(e) of EU Directive 2003/71/EC of the European Parliament and the Council of 4 November 2003 (the 'Prospectus Directive')); and/or (b) persons in the United Kingdom who are Qualified Investors and persons who are (i) investment professionals falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the 'Order'); (ii) persons who fall within article 43 of the order;  (iii) persons falling within Article 49(2)(a) to (d) ('high net worth companies, unincorporated associations, etc') of the Order; or (iv) persons to whom it may otherwise be lawfully communicated (all such persons in (a) and (b) together being referred to as 'Relevant Persons'). This announcement (including the Appendix) and the terms and conditions set out herein must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this announcement (including the Appendix) and the terms and conditions set out herein relate is available only to Relevant Persons and will be engaged in only with Relevant Persons. This announcement (including the Appendix) does not itself constitute an offer for sale or subscription of any securities in Sainsbury's.

This announcement, including the Appendix, is not for distribution, directly or indirectly, in or into the United States, Australia, Canada or Japan or any jurisdiction into which the same would be unlawful. This announcement does not constitute or form part of an offer or solicitation to purchase or subscribe for securities of Sainsbury's in the United States, Australia, Canada or Japan or any jurisdiction in which such an offer or solicitation is unlawful. No public offering of securities of Sainsbury's will be made in connection with the Placing in the United Kingdom, the United States or elsewhere.

The Placing Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the 'Securities Act') or under the laws of any state or other jurisdiction of the United States, and may not be offered, sold, transferred or delivered, directly or indirectly, in or into the United States except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act and in compliance with the securities laws of any state of the United States. 

The Bonds and the Shares to be issued upon conversion of the Bonds have not been and will not be registered under the Securities Act and may not be offered, sold or delivered within the United States. In addition, the Bonds are subject to U.S. tax law requirements and may not be sold to U.S. persons.

No money, securities or other consideration from any person inside the United States is being solicited by this announcement and the Appendix and, if sent in response to information contained in this announcement or the Appendix, will not be accepted.

This announcement is not a summary of the Offering in respect of the Bonds and is qualified in its entirety by reference to the offering circular to be prepared in connection with the Offering of the Bonds (the 'Prospectus'). This announcement does not purport to identify or suggest the risks (direct or indirect) which may be associated with an investment in the Bonds. Each investor should read the Prospectus for more complete information regarding the bonds before making an investment decision.

In connection with the issue of the Bonds, Morgan Stanley (the 'Stabilising Manager') or any person acting on behalf of the Stabilising Manager may over-allot Bonds or effect transactions with a view to supporting the market price of the Bonds at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager (or any persons acting on behalf of the Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the final terms of the offer of the Bonds is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the Issue Date of the Bonds and 60 days after the date of the allotment of the Bonds.

Persons (including individuals, funds or otherwise) by whom or on whose behalf a commitment to acquire Placing Shares has been given ('Placees') will be deemed to have read and understood this announcement, including the Appendix, in its entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, acknowledgements, and undertakings contained in the Appendix. In particular, each such Placee represents, warrants and acknowledges that it is:

(a) a Relevant Person (as defined above) and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business; 

(b) in the case of a Relevant Person in a member state of the EEA which has implemented the Prospectus Directive (each a 'Relevant Member State') who acquires any Placing Shares pursuant to the Placing: 

(i) a Qualified Investor; and

(ii) in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (a) the Placing Shares acquired by it in the Placing have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than Qualified Investors or in circumstances in which the prior consent of Morgan Stanley and UBS has been given to the offer or resale; or (b) where Placing Shares have been acquired by it on behalf of persons in any member state of the EEA other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Directive as having been made to such persons; and

(c) acquiring the Placing Shares for its own account or is acquiring the Placing Shares for an account with respect to which it exercises sole investment discretion, and that, unless otherwise agreed with Sainsbury's, it (and any such account) is outside the United States and is subscribing for the Placing Shares in an 'offshore transaction' (within the meaning of Regulation S under the Securities Act).

The relevant clearances have not been, and nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance, and the Placing Shares and Bonds have not been, and nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada or Japan. Accordingly, the Placing Shares and Bonds may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Australia, Canada or Japan or any other jurisdiction outside the United Kingdom. 

The Placing Shares and Bonds have not been approved or disapproved by the US Securities and Exchange Commission (the 'SEC'), any State securities commission or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing, the issue of Bonds or the accuracy or adequacy of this announcement. Any representation to the contrary is unlawful. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of the Appendix or this announcement should seek appropriate advice before taking any action.

Neither the Placing Shares to be issued pursuant to the Placing nor the Bonds to be issued pursuant to the Offering will be admitted to trading on any stock exchange other than the London Stock Exchange. 

Neither the content of Sainsbury's website nor any website accessible by hyperlinks on Sainsbury's website is incorporated in, or forms part of, this announcement.  

Each Placee should consult with its own advisors as to legal, tax, business and related aspects of a purchase of Placing Shares or the Bonds.

  APPENDIX

TERMS AND CONDITIONS

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING

In this Appendix, unless the context otherwise requires, Sainsbury's means J Sainsbury plc and Placee includes a person (including individuals, funds or others) on whose behalf a commitment to acquire Placing Shares has been given. 

Details of the Placing

The Placing Agents have entered into an agreement with Sainsbury's (the 'Placing Agreement') under which, subject to the conditions set out therein, the Placing Agents have agreed to use reasonable endeavours to procure subscribers for Placing Shares at a price determined following completion of the bookbuilding process in respect of the Placing (the 'Bookbuild'), described in this announcement and set out in the Placing Agreement. In accordance with the terms of the Placing Agreement, if Placees fail to take up their allocation of the Placing Shares at the Placing Price (as defined below), the Placing Agents have agreed to take up such shares in agreed proportions and the Company agrees to allot and issue such shares to the Placing Agents.

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of Sainsbury's including the right to receive all dividends and other distributions declared in respect of such ordinary shares after the date of issue of the Placing Shares.

As part of the Placing, Sainsbury's has agreed that it will not issue or sell any ordinary shares for a period of 90 days after Admission, without the prior consent of Morgan Stanley or UBS. These agreements are subject to certain customary exceptions and do not prevent Sainsbury's from granting or exercising options pursuant to the terms of the existing employee share schemes of Sainsbury's or convertible bonds disclosed in publicly available information.

Application for listing and admission to trading

Application will be made to the FSA for admission of the Placing Shares to the Official List of the FSA (the 'Official List') and to London Stock Exchange plc for admission to trading of the Placing Shares on its main market for listed securities (together 'Admission'). It is expected that Admission will become effective on or around 22 June 2009 and that dealings in the Placing Shares will commence at that time.

Bookbuild

The Placing Agents will today commence the Bookbuild to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

The Placing Agents and Sainsbury's shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their sole discretion, determine.

Participation in, and principal terms of, the Placing 

• Morgan Stanley and UBS are acting as Placing Agents for Sainsbury's.

• Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by the Placing Agents. The Placing Agents and their affiliates are each entitled to enter bids in the Bookbuild as principal.

• By participating in the Bookbuilding Process and the Placing, Placees will be deemed to have read and understood this announcement (including this Appendix) in its entirety and to be participating and making an offer for Placing Shares on the terms and conditions, and to be providing the representations, warranties acknowledgments and undertakings, contained in this Appendix.

• The Bookbuild will establish a single price payable to the Placing Agents by all Placees whose bids are successful (the 'Placing Price'). The Placing Price and the number of Placing Shares to be issued will be agreed between the Placing Agents and Sainsbury's following completion of the Bookbuild. Any discount to the market price of the ordinary shares will be determined in accordance with the Listing Rules. The Placing Price and the number of Placing Shares will be announced on a Regulatory Information Service following the completion of the Bookbuild (the 'Pricing Announcement'). 

• To bid in the Bookbuild, Placees should communicate their bid by telephone to their usual sales contact at any of the Placing Agents. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for at either the Placing Price, which is ultimately established by Sainsbury's and the Placing Agents, or at prices up to a price limit specified in its bid. Bids may be scaled down by the Placing Agents on the basis referred to in paragraph 10 below.

• The Bookbuild is expected to close no later than 4.30 p.m. (London time) on 17 June 2009 but may be closed earlier or later at the discretion of the Placing Agents and Sainsbury's. The Placing Agents may, in agreement with Sainsbury's, accept bids that are received after the Bookbuild has closed. Sainsbury's reserves the right (upon the agreement of the Placing Agents) to reduce or seek to increase the amount to be raised pursuant to the Placing, in its absolute discretion.

• Each prospective Placee's allocation will be agreed between the Placing Agents and Sainsbury's and will be confirmed orally by one of the Placing Agents as agent of Sainsbury's following the close of the Bookbuild. That oral confirmation will constitute an irrevocable legally binding commitment upon that person (who will at that point become a Placee) to subscribe for the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with Sainsbury's memorandum and articles of association.

• Each prospective Placee's allocation and commitment will be evidenced by a contract note issued to such Placee by one of the Placing Agents. The terms of this Appendix will be deemed incorporated therein. The Company will make a further announcement following the close of the Bookbuild detailing the number of Placing Shares to be issued and the price at which Placing Shares have been placed.

• Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the relevant Placing Agent as agent of Sainsbury's, to pay in cleared funds, an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to subscribe and Sainsbury's has agreed to allot and issue to that Placee.

• Subject to paragraphs 5 and 6 above, the Placing Agents may choose to accept bids, either in whole or in part, on the basis of allocations determined in agreement with Sainsbury's and may scale down any bids for this purpose on such basis as they may determine. The Placing Agents may also, notwithstanding paragraphs 5 and 6 above, subject to the prior consent of Sainsbury's (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time.

• A bid in the Bookbuild will be made on the terms and subject to the conditions in this announcement and will be legally binding on the Placee on behalf of which it is made and except with the consent of either of the Placing Agents will not be capable of variation or revocation after the time at which it is submitted.

• Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under 'Registration and settlement'.

• All obligations under the Bookbuild and Placing will be subject to fulfilment of the conditions referred to below under 'Conditions of the Placing' and to the Placing not being terminated on the basis referred to below under 'Termination of the Placing'.

• By participating in the Bookbuild, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.

• To the fullest extent permissible by law, neither of the Placing Agents nor any of their affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither of the Placing Agents nor any of their affiliates shall have any liability (including to the fullest extent permissible by law, any fiduciary duties) in respect of the Placing Agent's conduct of the Bookbuild or of such alternative method of effecting the Placing as the Placing Agents and Sainsbury's may agree.

Conditions of the Placing

The obligations of the Placing Agents under the Placing Agreement are conditional on, inter alia: 

(a) agreement being reached between Sainsbury's and the Placing Agents on the Placing Price and the number of Placing Shares; 

(b) the representations and warranties contained in the Placing Agreement being true and accurate on the date of the Placing Agreement and Admission; 

(c) Sainsbury's complying with its obligations under the Placing Agreement to the extent the same fall to be performed or satisfied on the date of the Placing Agreement and, save to the extent that such obligations are deemed to be immaterial in the context of the Placing, on Admission; 

(d) The subscription agreement for the Bonds not having been terminated in accordance with its terms prior to Admission;

(e) Sainsbury's allotting, subject only to Admission, the Placing Shares in accordance with the Placing Agreement; 

(f) Admission taking place by 8.00 a.m. (London time) on 22 June 2009 or such later date as Sainsbury's and the Placing Agents may otherwise agree; and

(g) Prior to Admission, none of the following having occurred:

(i) either Standard & Poor's or Moody's rating agency having downgraded, or given notice or made any public announcement of any downgrading or of any review or surveillance with negative implications of, the rating accorded to any of the debt securities of the Issuer; or

(ii) a change in or a development which would be reasonably likely to result in a change in the condition (financial or otherwise), future financial performance, capital position, earnings, results of operations or business affairs of the Issuer and its Group taken as a whole and which, in any case, in the opinion of either of the Placing Agents (acting in good faith and having consulted with the Issuer to the extent the circumstances permit) is material in the context of the Placing or the Issuer's Group. 

If any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by the Placing Agents, by the respective time or date where specified (or such later time and/or date as Sainsbury's and the Placing Agents may agree), either of the Placing Agents shall have the option of terminating the Placing Agreement in the manner (and the consequences) specified below. If the Placing Agreement is terminated in the circumstances specified below, the Placing will not proceed and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.

The Placing Agents may, at their discretion and upon such terms as they think fit, waive compliance by Sainsbury's with the whole or any part of any of Sainsbury's obligations in relation to the conditions in the Placing Agreement. Any such extension or waiver will not affect Placees' commitments as set out in this announcement.

None of the Placing Agents, Sainsbury's or any other person shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Placing Agents.

Termination of the Placing

The Placing Agents are entitled, at any time before Admission, to terminate the Placing Agreement in relation to their obligations in respect of the Placing Shares by giving notice to Sainsbury's if, inter alia, the Placing Agents are of the opinion (acting in good faith) that :

(a) Sainsbury's has failed to comply with any obligation under the Placing Agreement save for those which are deemed to be immaterial in the context of the Placing; or

(b) there has occurred any breach of any representation, warranty or undertaking in the Placing Agreement or an event has occurred or is likely to occur which, if the representations, warranties and undertakings in the Placing Agreement were repeated immediately after that event, would give rise to a breach of any of them; or

(c) any of the conditions set out in the Placing Agreement are not satisfied or waived by the Placing Agents, by the relevant time or date where specified; or

(d) there has occurred any material adverse change in the financial markets in the United States, United Kingdom or in any other member state of the European Economic Area (EEA) or the international financial markets generally or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case as would be likely to prejudice materially the success of the offering and distribution of the Placing Shares or dealings in the Placing Shares in the secondary market or the effect of which is such as to make it impracticable or inadvisable to market the Placing Shares or to enforce orders for the placement of the Placing Shares; or

(e) if there has occurred any outbreak of hostilities or escalation thereof, incident of terrorism or other calamity or crisis, in each case the effect of which is such as to make it impracticable or inadvisable to market the Placing Shares or to enforce orders for the placement of the Placing Shares; or

(f) if trading in any securities of Sainsbury's has been suspended or materially limited by the LSE or on any exchange or over-the-counter market, or if trading generally on the New York Stock Exchange or the LSE has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required by any of said exchanges or by such system or by order of the National Association of Securities Dealers, Inc. or any other governmental authority, or a material disruption has occurred in the commercial banking or securities settlement or clearance services in the United States or Europe; or

(g) if a general banking moratorium has been declared by the authorities of any of the United Kingdom, the United States or any member of the EEA which would make it impracticable or inadvisable to market the Placing Shares or to enforce orders for the placement of the Placing Shares, and/or be likely to prejudice materially the success of the issue and offering of the Placing Shares or the distribution of the Placing Shares or dealings in the Placing Shares in the secondary market.

Upon such termination, the parties to the Placing Agreement shall be released and discharged (except for any liability arising before or in relation to such termination or in respect of any accrued rights of the parties to the Placing Agreement) from their respective obligations under or pursuant to the Placing Agreement subject to certain exceptions.

By participating in the Placing, Placees agree that the exercise by the Placing Agents or Sainsbury's of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Placing Agents or Sainsbury's (as the case may be) and that they need not make any reference to Placees and that they shall have no liability to Placees whatsoever in connection with any such exercise or failure so to exercise.

No prospectus

No offering document or prospectus has been or will be submitted to be approved by the FSA in relation to the Placing and Placees' commitments will be made solely on the basis of the information contained in this announcement (including this Appendix) released by Sainsbury's today, and subject to the further terms set forth in the contract note to be provided to individual prospective Placees.

Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement (including this Appendix) is exclusively the responsibility of Sainsbury's and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of Sainsbury's or the Placing Agents or any other person and none of the Placing Agents or Sainsbury's nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of Sainsbury's in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

Registration and settlement

Settlement of transactions in the Placing Shares (ISIN: GB00B019KW72) following Admission will take place within the system administered by Euroclear UK & Ireland Limited ('CREST'), subject to certain exceptions. Sainsbury's reserves the right to require settlement for and delivery of the Placing Shares (or a portion thereof) to Placees in certificated form if, in the Placing Agents' opinion, delivery or settlement is not possible or practicable within the CREST system or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Following the close of the Bookbuild for the Placing, each Placee allocated Placing Shares in the Placing will be sent a contract note stating the number of Placing Shares to be allocated to it at the Placing Price and settlement instructions.

Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions that it has in place with the Placing Agents.

Sainsbury's will deliver the Placing Shares to a CREST account operated by UBS as agent for Sainsbury's and UBS will enter its delivery (DEL) instruction into the CREST system. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.

It is expected that settlement will be on 22 June 2009 on a T + 3 basis in accordance with the instructions given to the Placing Agents.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by the Placing Agents. 

Each Placee is deemed to agree that, if it does not comply with these obligations, Sainsbury's may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for Sainsbury's account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

Representations and warranties

By participating in the Placing each Placee (and any person acting on such Placee's behalf):

• represents and warrants that it has read this announcement, including the Appendix, in its entirety and that its acquisition of Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein; 

• acknowledges that no offering document or prospectus has been or will be prepared in connection with the placing of the Placing Shares and represents and warrants that it has not received a prospectus or other offering document in connection therewith;

• acknowledges that the Sainsbury's ordinary shares are listed on the Official List, and Sainsbury's is therefore required to publish certain business and financial information in accordance with the rules and practices of the FSA, which includes a description of the nature of Sainsbury's business and Sainsbury's most recent balance sheet and profit and loss account and that it is able to obtain or access such information without undue difficulty, and is able to obtain access to such information or comparable information concerning any other publicly traded company, without undue difficulty;

• acknowledges that none of the Placing Agents or Sainsbury's nor any of their affiliates nor any person acting on behalf of any of them has provided, and will not provide, it with any material regarding the Placing Shares or Sainsbury's or any other person other than this announcement; nor has it requested any of the Placing Agents, Sainsbury's, any of their affiliates or any person acting on behalf of any of them to provide it with any such information;

• acknowledges that (i) unless otherwise agreed with Sainsbury's, it and, if different, the beneficial owner of the Placing Shares is not, and at the time the Placing Shares are acquired will not be in the United States, or residents of Australia, Canada or Japan, and (ii) the Placing Shares have not been and will not be registered under the securities legislation of the United States, Australia, Canada or Japan and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, in or into those jurisdictions;

• acknowledges that the content of this announcement is exclusively the responsibility of Sainsbury's and that none of the Placing Agents nor any person acting on their behalf has or shall have any liability for any information, representation or statement contained in this announcement or any information previously published by or on behalf of Sainsbury's and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this announcement or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to subscribe for the Placing Shares is contained in this announcement and any information previously published by Sainsbury's by notification to a Regulatory Information Service, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by any of the Placing Agents or Sainsbury's and none of the Placing Agents or Sainsbury's will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of Sainsbury's in deciding to participate in the Placing. Nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person; 

• acknowledges that none of the Placing Agents nor any person acting on behalf of them nor any of their affiliates has or shall have any liability for any publicly available or filed information, or any representation relating to Sainsbury's, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person; 

• represents and warrants that neither it, nor the person specified by it for registration as a holder of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services);

• represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 (the 'Regulations') and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations; 

• if a financial intermediary, as that term is used in Article 3(2) of the Directive of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading (No 2003/71/EC) (as amended) (the 'Prospectus Directive') (including any relevant implementing measure in any member state), represents and warrants that the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the European Economic Area which has implemented the Prospectus Directive other than to qualified investors, or in circumstances in which the prior consent of the Placing Agents has been given to the proposed offer or resale;

• represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 ('FSMA');

• represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (including any relevant implementing measure in any member state);

• represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person;

• represents and warrants that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;

• represents and warrants that it is a 'qualified investor' within the meaning of the Prospectus Directive (including any relevant implementing measure in any member state);

• represents and warrants that it and any person acting on its behalf is entitled to subscribe for and purchase the Placing Shares under the laws of all relevant jurisdictions which would apply to it, and that it and any person acting on its behalf is in compliance with applicable laws in the jurisdiction of its residence, the residence of the Company, or otherwise and that it has all necessary capacity and has obtained all necessary consent and authorisation;

• undertakes that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this announcement (including this Appendix) and the contract note on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as the Placing Agents may in their discretion determine and without liability to such Placee and it will remain liable for any amount by which the net proceeds of such sale falls short of the product of the Placing Price and the number of Placing Shares allocated to it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out are referred to in this announcement) which may arise upon the sale of such Placee's Placing Shares on its behalf; 

• acknowledges that its allocation (if any) of Placing Shares will represent a maximum number of Placing Shares which it will be entitled, and required, to subscribe for, and that Sainsbury's may call upon it to subscribe for a lower number of Placing Shares (if any), but in no event in aggregate more than the aforementioned maximum;

• acknowledges that neither of the Placing Agents, nor any of their respective affiliates, nor any person acting on behalf of either of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of either Placing Agents and that the Placing Agents have no duties or responsibilities to it for providing the protections afforded to their clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

• undertakes that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. Neither of the Placing Agents or Sainsbury's will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify Sainsbury's and the Placing Agents in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock account of UBS who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;

• acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreements shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by Sainsbury's or the Placing Agents in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange; 

• agrees that Sainsbury's, the Placing Agents and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to the Placing Agents on its own behalf and on behalf of Sainsbury's and are irrevocable;

• agrees to indemnify and hold Sainsbury's, the Placing Agents and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;

• acknowledges that its commitment to subscribe for Placing Shares on the terms set out herein and in the contract note will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to Sainsbury's conduct of the Placing. The foregoing representations, warranties and confirmations are given for the benefit of Sainsbury's as well as the Placing Agents. The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to the subscription by it and/or such person direct from Sainsbury's for the Placing Shares in question. Such agreement assumes, and is based on a warranty from each Placee, that neither it, nor the person specified by it for registration as holder, of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services). If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable. In that event the Placee agrees that it shall be responsible for such stamp duty or stamp duty reserve tax, and neither Sainsbury's nor the Placing Agents shall be responsible for such stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify the Placing Agents accordingly;

• acknowledges that no action has been or will be taken by any of the Company, the Placing Agents or any person acting on behalf of Sainsbury's or the Placing Agents that would, or is intended to, permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required; and

• acknowledges that it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and are able to sustain a complete loss in connection with the Placing. It has relied upon its own examination and due diligence of Sainsbury's and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved.

• if it is a pension fund or investment company, its purchase of Placing Shares is in full compliance with applicable laws and regulations.

In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares. 

Each Placee and any person acting on behalf of each Placee acknowledges and agrees that the Placing Agents or any of their affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares. 

When a Placee or person acting on behalf of the Placee is dealing with the Placing Agents, any money held in an account with any of the Placing Agents on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FSA made under FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the relevant Placing Agents' money in accordance with the client money rules and will be used by the relevant Placing Agents in the course of their own business; and the Placee will rank only as a general creditor of the Placing Agents. All times and dates in this announcement may be subject to amendment. The Placing Agents shall notify the Placees and any person acting on behalf of the Placees of any changes.

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

  Definitions

In this announcement, unless the context requires otherwise:

'LIBOR'	means The London Interbank Offered Rate
'Listing Rules'	means the listing rules produced by the FSA under Part VI of FSMA and forming part of the FSA's handbook of rules and guidance as amended from time to time;
'Placing Agents'	means UBS and Morgan Stanley;
'Regulation S'	means Regulation S promulgated under the Securities Act;
'Regulatory Information Service'	means any of the regulatory information services included within the list maintained on the London Stock Exchange's website
'United Kingdom' or 'UK'	means the United Kingdom of Great Britain and Northern Ireland;
'United States' or 'US'	means the United States of America, its territories and possessions, any state of the United States and the District of Columbia.

 

END

 

 

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