Tesco seeks to raise up to 18.4B baht via sale of 1.77 billion shares of Thailand's Tesco Lotus Retail Growth Freehold and Leasehold Property Fund; fund will use proceeds from sale to buy 17 malls from Tesco and then lease them back to company

LOS ANGELES , February 20, 2012 () – British retailer Tesco Plc. is seeking to raise up to 18.4 billion baht (US$598 million) via the sale of 1.77 billion shares of its Tesco Lotus Retail Growth Freehold and Leasehold Property Fund, Bloomberg reported Feb. 20.

According to a presentation by Ek-Chai Distribution System Co., the shares will be sold for between 9.65 baht and 10.4 baht each.

According to the statement, the Tesco Lotus Retail Growth Freehold and Leasehold Property Fund will use the proceeds from the sale to buy 17 malls from Tesco and then lease them back to Tesco. The fund expects to make money via this arrange in addition to paying a total distribution of 6.5%-7% annually.

During the six-month period through August, Tesco’s Thailand arm generated $2.5 billion in sales, making it Tesco’s third-largest revenue source following the U.K. and South Korea, said Bloomberg.

Ek-Chai said that Tesco has more than 900 stores and employs approximately 38,000 staff in Thailand.

According to Ek-Chai’s annual report, Tesco has 86% of the voting rights in the company.

Six of the 17 malls that the Fund plants to purchase our in Bangkok, eight are in growing cities, and an additional three are located in tourist destinations.

The Tesco IPO will be the biggest in Thailand since May 2006, when Rayong Refinery Pcl raised 25.2 billion baht, it Tesco increases the maximum amount sought.

Ek-Chai said that Phatra Securities Pcl will manage the Tesco Lotus sale in Thailand, while Bank of America Merrill Lynch, Nomura Holdings Inc. and Royal Bank of Scotland Plc will help sell the Tesco Lotus shares international investors.

The Tesco Lotus property fund will be managed by Krung Thai Asset Management Pcl, and the price of units will be set by Ek-Chai on March 5, Ek-Chai added.

The primary source of this article is Bloomberg, New York, New York, on Feb. 20, 2012.

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