Issa brothers pile another £500m of debt on to Asda after petrol stations sale falls through
The billionaire brothers who own Asda are facing fresh scrutiny after loading the supermarket chain with yet more debt.
Mohsin and Zuber Issa, who bought Asda for £6.8billion last year, had planned to part finance the deal by selling the grocer’s petrol stations to another part of their business empire for £750million.
But the sale to forecourt owner EG Group was called off this week – leaving the Issas and their private equity backers TDR Capital with a £750million black hole at Asda.
Mohsin and Zuber Issa (pictured) bought Asda for £6.8bn last year, and planned to part finance the deal by selling the grocer’s petrol stations to another part of their business empire
To get round the problem, they are putting another £500million of debt on to the supermarket and using £250million of its own cash reserves.
But the move has caused concern over the financial health of Asda under its owners and caused dismay among unions.
GMB, which represents Asda workers, is demanding to meet bosses, saying the move is ‘extremely worrying’ for its 145,000 staff.
Experts also warned the extra debt – on top of some £3.8billion already thought to have been taken on in the takeover – will ratchet up the supermarket’s risk profile.
Nadine Houghton, GMB national officer, said: ‘Asda workers have been through the grinder during the past couple of years.
‘The Issa brothers need to reassure them about the long-term future of the profit-making supermarket they have acquired.’
The Issas abandoned the planned sale of Asda’s 323 petrol stations to EG – which already owns 370 forecourts across the UK and 6,000 globally – after being shown detailed financial information on the business.
The decision to halt the sale to EG will not stop the rollout of Asda convenience stores in EG’s petrol stations.
Asda will recruit 15,000 temporary staff over the busy Christmas period. About 500 jobs will be in depots and 1,500 will be home delivery roles. The rest will be in stores across the UK.