Asda paid £375m in interest on £6.8bn takeover deal

Asda paid £375.1 million in interest last year on its owners Issa brothers and TDR Capital’s £6.8 billion deal to buy the Big 4 grocer.

According to documents filed on Companies House, the supermarket giant used £4.06 billion of debt to finance the takeover, with Asda paying £202 million of interest on external debt, £106 million on lease liabilities, £56 million on inter-company loans.

Around £2 million of additional undisclosed interest payments were also made.

According to The Times, the supermarket owners, who value at £9.22 billion, put in less than £800 million of cash when they acquired Asda in October 2020.

This comes as Asda reported £20.7 billion in sales, including fuel, and £3.03 billion of pre-tax profits for the year to 31 December.

READ MORE: Asda chief customer officer leaves after less than a year

However, in its first quarter to 31 March, Asda’s like-for-likes fell 9.2%, which the grocer attributed to an “exceptional” period when the UK was in lockdown.

This follows recent reports that city traders are selling off Asda’s bonds at a discount of almost a fifth, suggesting investors are growing nervous that the supermarket may struggle to pay the money back in full.

According to The Mail on Sunday, two of Asda’s bonds that were issued in 2020 and 2021 with a value of £2.75 billion are trading at a discount of 17%, with other bonds, with a total value of around £725 million, when sold, are now trading at a discount of about 10%.

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