The highly leveraged £6.8bn takeover of Asda resulted in the supermarket paying £375.1m in interest last year, accounts have shown.
Asda’s new owners are yet to take any dividends from the business. However, as a result of the £4.06bn of debt used to finance their takeover, the company has paid £202m of interest on external debt, £106m on its lease liabilities, £56m on intercompany loans and £2m of additional undisclosed interest payments, according to Companies House filings from the owners’ Bellis Finco vehicle.
The billionaire Issa brothers and private equity firm TDR Capital, which together also own petrol forecourts chain EG Group, put in less than £800m of equity when buying Britain’s third biggest supermarket. About £200m of that was funded from cash from the forecourts business.
By contrast, Walmart, which has kept a 10% stake in Asda, received a £1.15bn dividend in 2020 as the supermarket’s profit fell by more than a quarter.
The Asda takeover was Britain’s biggest leveraged buyout for more than a decade, before it was eclipsed by Morrisons’ £7.1bn take-private deal by Clayton Dubilier & Rice a year later.
Asda generated £20.7bn of revenue, including fuel, and £3.03bn of pretax profit for the year to 31 December. Bellis Finco booked a £279.1m gain from the sale and leaseback of the grocer’s 27 distribution centres to Blackstone. Asda insiders highlighted that the business still had a large amount of freehold properties and its interest payments were covered more than two times by its free cashflow.
Asda’s owners have ascribed a £9.22bn value to the supermarket, according to the filings.
