Asda owners, Mohsin and Zuber Issa have agreed on a $1.5 billion sale and leaseback deal across a proportion of EG Group’s US property portfolio.
According to reporting by the Evening Standard, this comes as the billionaire brothers look to bring down the Group’s debt burden as interest rates soar.
EG Group has sold 415 stores on the US east coast to property company, Realty Income, which represents around 15% of its property empire, and will lease the assets back for a $103m (£85m) annual rental fee.
Subscribe to Grocery Gazette for free
Sign up here to get the latest grocery and food news each morning
It has said the move is part of its “commitment to reduce total net leverage through debt reduction and free cash flow generation.”
The net proceeds of the deal, which are expected to complete in the second half of this year, will be used to repaypay its debt pile, which stands at $9bn (£7.4bn), according to its latest quarterly report.
“Today’s announcement demonstrates the progress we continue to make to put in place a robust capital structure for the medium term that will underpin our long-term strategy and represents an important first step in this process,” co-chief executive, Zuber Issa said.
This comes as in January, the Issa brothers considered a merger between Asda and their UK petrol forecourts business, in a deal that would value the business at £12 billion.
1 Comment. Leave new
We can only assume that they see value in this deal in part due to the very advantageous £/$ exchange rate. Otherwise, I see little long term merit in this. They would be better served by reducing their debt via earnings.