Exactly why I posted earlier that Mr Potts take on current matters will be very interesting, he has a clean slate so to speak and will see things with a degree of clarity.
The main financial downside for Ocado will be if Erith has to be financed without any cash from MRW just as net debt exceeds the total value of the business. Any hint that MRW have doubts about the deal could impact on potential licences for IP.
I think if Morrisons would like to restrict their online, then it will be no much harm to Ocado. They still would have to pay half of the cost for Dordon etc. If they won't opt in to Erith, then Ocado would have a bit more time before doing CFC5. Morrisons would only speed that up. On the other hand, there is an interest for Ocado to get Morrisons running as much as possible giving some cash from their sales and greater efficiency of running more CFCs with better transport routing, possibly new geographies etc. But that is about it what I can find.
Who says the only choice for MRW is pull out or stay? What about renegotiation? Now that MRW have hit the £200m t/o under the agreement they are under no obligation to chase further online sales as the more the deliveries the greater the loss. Plus it's possible that MRW will calculate that the costs of contributing to Erith outweigh the gains. Any of the above could curtail Ocado's future payments from MRW
I'm quite sure the agreement is watertight, if the new CEO decides to pull out there will be serious financial penalties for MRW so Ocado win either way. Lets give Dave Potts the opportunity to look over the deal and hear his take on it which should be very interesting. If they do pull out MRW still have to set up their own online solution, it's not in their interest to back out.
It would seem...
... That the deal with morrisons is for 25years, with no break clause, according to the comments attributed to Ocado's finance person, in the Telegraph (25/02/15) so not sure what the new Morrisons CEO can achieve, which is not mutually beneficial to them and us, if anything...hope this is fact and will be widely reported on sometime soon.
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