Tesco considering $20.4 billion float of Asian business as chairman resigns over accounting scandal

Tesco Plc. CEO Dave Lewis arrives for Tesco's interim results announcement in London on Oct 23, 2014. UK supermarket giant Tesco is considering the drastic option of spinning off its Asian operations and floating them as a separate company in or
Tesco Plc. CEO Dave Lewis arrives for Tesco's interim results announcement in London on Oct 23, 2014. UK supermarket giant Tesco is considering the drastic option of spinning off its Asian operations and floating them as a separate company in order to raise funds following discovery of a more massive than expected hole in its accounts, the Telegraph reported on Thursday. -- PHOTO: REUTERS

LONDON - UK supermarket giant Tesco is considering the drastic option of spinning off its Asian operations and floating them as a separate company in order to raise funds following discovery of a more massive than expected hole in its accounts, the Telegraph reported on Thursday.

The news came hours before the chairman of Britain's biggest retailer announced he would resign after Tesco was found to have overstated profits by £263 million (S$537.2 million).

"The board's immediate focus must be on ensuring that we complete the transition to a new management team and that new and far-reaching business plans are put in place quickly," chairman Richard Broadbent said in a statement that also revealed Tesco's net profit had slumped to just £6.0 million in its first half from £820 million one year earlier.

Tesco, which has lost 20 per cent of its market value this month after three profit warnings and the accounting mis-statement, scrapped the outlook as its second-quarter underlying domestic sales fell sharply, down 5.5 per cent, Reuters reported.

In an attempt to bring the crisis under control, Dave Lewis, the new chief executive, together with the chain's merger and acquisitions team, has drawn up a shortlist of possible disposals that could raise billions of pounds to help pay down debt and ease concern among its lenders, ratings agencies and investors, the Telegraph said.

One move that is now being looked at seriously is carving out Tesco's prized Asian assets and listing them separately on the stockmarket, the newspaper said. It added that the businesses are estimated to be worth between £8 billion and £10 billion.

Tesco's businesses in South Korea and Thailand are its largest international operations, it also has a strong presence in Malaysia, where it employs 15,000 people and operates about 45 outlets

Tesco has more than 400 stores in South Korea under the Homeplus brand, as well as 1,700 in Thailand, where it operates as Tesco Lotus and has a collection of smaller stores.

Tesco said Thursday it was reviewing all opportunities to generate value and create financial headroom following the speculation that it could look to sell assets to raise cash.