Asda hit with new refinancing fears as Walmart debt looms
Asda risks being made to refinance its multi-billion pound debt pile ahead of a repayment owed to its former owner American supermarket chain Walmart.
According to credit rating agency Fitch, the £900m bill that the grocer faces from Walmart, which is due for repayment by 2028, could risk the grocer’s entire capital structure, The Telegraph reported.
Asda, which has a current debt pile of around £6bn, refinanced more than £3.2bn of debt in May, in a deal that pushes its debt burdens into the next decade.
In a note issued last week, Fitch downgraded the retailer’s expected earnings by £185m and said it may have to refinance in order to pay the £900m bill to Walmart, which consists of a £500m stake and £400m of interest.
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An Asda spokesman told The Telegraph: “We acknowledge Fitch’s view; however, it should be noted this reflects their opinion and is not a statement of fact.
“Asda continues to take a disciplined and proactive approach to managing its debt obligations. Earlier this year, we successfully refinanced more than £3.2bn, a move that demonstrated robust investor confidence in the business and pushed the majority of our maturities well into the next decade.
“Asda is a highly cash-generative business with a strong and stable capital structure, enabling us to invest in our colleagues and new customer propositions while simultaneously reducing leverage, which has decreased from x4.1 to x3.0 over the last 18 months.
“Asda’s net debt at the end of Q3 2024 was £3.8bn – a £100m reduction on the previous quarter – and the business is committed to deleveraging.”
Last month, Asda named former CEO Allan Leighton as its executive chairman, succeeding Lord Stuart Rose, as it attempts to deliver a turnaround plan to halt its recent decline in sales.
While Leighton said his initial priority would be to “restore Asda’s DNA”, including making improvements to price and availability, and hiring a new CEO, he flagged it could take three to five years to turn around the grocer’s flagging performance.
3 Comments. Leave new
The Issa brothers ruined the business. Anything they touch is saddled with debt through legalised fraud basically. They should be disgusted. They are a pair of crooks.
Interesting observation holly
How much debt did Asda have on the books when sold by Walmart other than the £900m
Sold for £6.8bn in 2021, is with a £6bn debt pile. and combined/reversed into the Issa’s EG UK & Ireland for £2.27bn.
Shady and opaque.