Caffe Nero gets £7m (€11m) to fund expansion

Caffe Nero has secured a further £7m (€11m) from Bank of Scotland Corporate Banking to fund its expansion.

The extra cash gives the group £10m (€15m) available for growth.

Caffe Nero says this cash should be sufficient to meet the group's UK funding requirements for at least the next year.

It says its trading results for the year ended 31 May 2002 are very encouraging and in line with market expectations.

Caffe Nero continues to see stable growth in London and encouraging levels of growth in the regions, where it is increasingly growing its market share.

It says the addition of the former Aroma sites acquired from McDonald's in April is also beginning to make an impact.

Shares in Coffee Republic have risen in the last few days after it emerged Caffe Nero had built a 10% stake in its rival. Coffee Republic also announced it had received a takeover approach from an unnamed party.

Both parties have declined to comment on the developments.

Mark Hughes, retail analyst at Numis Securities, says today's announcement heightens speculation of a possible bid from Caffe Nero.

He adds: "It puts them in a position to do something if they want to do it. This also shows confidence from its bank in the company's performance."