BlackRock sells stake in troubled supermarket chain Tesco
25 Sep 2014
UK retailer, Tesco's second biggest shareholder has sold part of its stake in the troubled supermarket chain, according to an announcement last night, as the company's £250-million accounting scandal (See: Tesco executives might face parliamentary enquiry over accounting error).
The Guardian reported US investor BlackRock's stock in the retailer had fallen to under 5 per cent in the aftermath of mishandling of supplier payments.
BlackRock's stake had hovered near 5 per cent in August, but it remained unclear how far it had fallen back.
Tesco shares fell 11.5 per cent on Monday before stabilising, and 4 per cent the following day, when new market data revealed a further drop in the supermarket's sales. The shares had halved in the last 12 months and closing at 194.9p last night.
Following Tesco's admission of potential accounting problems, ratings agency Standard & Poor's placed its creditworthiness under review yesterday pending the outcome of the retailer's internal investigation into the affair.
Pressure on the retailer's board, and especially chairman Sir Richard Broadbent, mounted after the ratings agency said it had cut its assessment of management and governance at the group to ''fair'' from ''satisfactory''. More than one shareholder is understood to be willing to discuss Broadbent's position.
The Guardian quoted, Clive Black, an analyst at Shore Capital, as saying Broadbent had said shareholders would decide whether he was part of the problem or the solution. He added the problem was that Tesco needed to have an effective chairman.
Meanwhile, Tesco had confirmed commencing discussions with staff in its Irish stores over possible redundancies, RTÉ News reported, without indicating the extent of job cuts.
According to Tesco, the move had nothing to do with this week's revelations that the company had overstated its profits.
In a statement to RTÉ News, Tesco said that it was in "early stage discussions" with some of its departmental stores' for voluntary re-deployment to other roles or voluntary redundancy.
Tesco stressed redundancies would be voluntary and that staff would also be offered the option of moving to part-time from full-time employment.
According to Tesco, with over 2.5 million customer transactions per week, the company kept the structures of its business under constant review to ensure that it offered the best possible service to customers.
