The ratings on the leading U.K.-based food retailer Tesco PLC reflect the company's announcement of an £810 million ($1.5 billion) equity issue that will help improve the company's financial profile. From a financial risk perspective, Standard&Poor's believes the equity issue will allow Tesco's debt-protection measures to recover to levels commensurate with the ratings on the company from their existing weak levels. Standard&Poor's estimates that, on a pro forma basis in 2004, Tesco's lease-adjusted funds from operations (FFO) to net debt (capitalized for operating leases and pension deficits) will improve to about 35% from the current 28% for the 12 months ended Aug. 9, 2003, and fixed-charge coverage (earnings before interest, taxes, depreciation, amortization, and rent [EBITDAR]
