Union fears over £3.5bn debt plan by Asda owners
ASDA’S new owners, the billionaire Issa brothers and TDR Capital, are to load around £3.5billion of debt on to the supermarket, as part of their takeover.
They are acquiring the chain from US parent Walmart for £6.8billion. To finance the deal, they are borrowing £3.5billion from debt market investors. The highinterest loans will be the responsibility of Asda when the takeover completes this month.
The new owners plan a sale of distribution network assets such as warehouses to specialist property investors which may raise billions. Asda is also selling its forecourts to EG Group, the world’s largest fuel station firm, for £750million.
EG is jointly owned by Zuber and Mohsin Issa and TDR who say the retailer will stay a market “price leader”.
But leaders of the GMB union fear the refinancing will leave Asda struggling to compete against traditional rivals Tesco, Sainsbury’s and Morrisons as well as discounters Aldi and Lidl, risking jobs.
Roger Jenkins of the GMB said: “We demand assurances that this multi-billion pound debt will not endanger their livelihoods. Asda is a profitable company that does not need to be loaded with debt.
“The Issa brothers need to show some appreciation for the workers who make the Asda empire what it is and give assurances on their future employment and their future pay and conditions.”
A source close to the Issas and to private equity group TDR dismissed fears and said neither the financing nor the forecourt sale would affect the running of Asda or its staff. They added the owners plan to invest £1billion over three years.
Asda yesterday said sales rose 6.9 per cent in the run-up to Christmas.