The Issa brothers’ EG Group has embarked on a staggering $6.1 billion debt refinancing deal as it faces looming deadlines over billions of pounds of loans.
The firm said today it had entered into discussions with lenders to extend the length of its loans as well as its overdraft facilities as it reported a first quarter drop in earnings.
The deal comprises loans of €2.12billion (£1.82 billion), $2.79 billion (£2.23 billion), £600 million and A$378 million (£202 million), according to Bloomberg data.
EG Group said: “The Group has launched a three year amend & extend of its term loans. The Group has already initiated a process with key relationship banks seeking both an extension of its RCF and banking facilities, and has received good support in this process.”
The firm today reported first-quarter EBITDA of $228 million, a fall of 13% on the previous year, which it said was a reflection of “competitive market pressures following oil price decreases in the quarter.”
It comes after the retail and petrol forecourt conglomerate sold off billions of pounds of assets in a bid to bear down on its heavy debt burden. In March, the company struck a $1.5 billion dollar sale and leaseback deal on its property in the US, while earlier this week, the firm sold the majority of its UK operations to Asda, also owned by the billionaire duo, in a £2.3 billion deal.
EG Group said the transactions are expected to reduce total net debt from $9.8 billion in March 2023 to $5.4 billion post-completion, with net leverage to fall from 6.3x to 4.9x.
Chair Stuart Rose told reporters that the primary purpose of the Asda deal was to expand the supermarket’s operations but “if as a consequence you’ve also got the opportunity to deleverage then what’s the problem with that?”
Zuber Issa said the sales “enable us to significantly reduce our overall leverage to below five times, in line with our financial policy and deleveraging strategy.
“We will now be addressing our upcoming maturities…which will help us to put in place a sustainable long-term capital structure.”