Iceland is ‘vulnerable to takeover’ if chief executive Richard Walker successfully becomes an MP, a City source has told The Grocer.
According to the source, the prospect is not good for the supermarket paying off its debt by 2025, and could leave the frozen food retailer more at risk of being acquired by opportunistic investors.
Walker’s hopes of being an MP emerged earlier this year after his name appeared on the Conservative Party’s list of approved parliamentary candidates.
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The Iceland boss has since spoken publicly about his ambition, including on ITV’s political interview show Peston this week.
On the programme, Walker defended the government’s stance on striking nurses and rail workers.
Iceland has £550m of bonds that need to be repaid in 2025, and difficulty in refinancing could create an opportunity for investors to seize control in a debt-for-equity swap.
Investors were buying the supermarket’s debt for as little as 67p in the pound earlier this year, as reported by the Telegraph in November.
The source told The Grocer that the frozen food retailer’s surging energy costs were already bad for its refinancing prospects.
“Iceland has the challenges many grocers have at the moment but theirs is proliferated by their categories eating an awful lot of electricity.
“They will be hoping that by 2024 things look a lot better and they have taken market share during the downturn. The longer the slump lasts, the trickier the prospects are for them.
“When you’re looking at a refinancing exercise it’s not just the numbers. There is also a much broader outlook for the business, including who are you lending to, as in the management team,” the source added.
The news comes as Iceland has seen a 7.6% jump in sales as consumers turn to frozen food to reduce waste in the face of rising energy prices and other inflationary concerns.
