// Moody’s downgrades EG Group from corporate family rating to B3 from B2 and its probability of default from B2-PD to B3-PD
// Another blow for Issa brothers after abrupt departure of Deloitte
// Moody’s cites “limited progress in terms of financial reporting and governance” as reason by downgrade
The billionaire businessmen on track to buy Asda this week saw their debt rating cut by credit agency Moody’s.
Zuber and Mohsin Issa’s petrol station empire EG Group was criticised by Moody’s for failing to improve its financial reporting and management processes after two years of what it deemed to be “large-scale” merger and acquisition activity.
Moody’s announced the rating action on Wednesday, saying that it reflected the company’s “limited progress in terms of financial reporting and governance with regards to internal controls and board composition”.
“Moody’s understands that this has contributed to the recent resignation of its auditors and their replacement with new auditors,” the agency said in a statement.
- EG Group finance boss considered departure after Asda acquisition
- Deloitte exits as Asda owner EG Group’s auditor after £6.8bn deal
“Moody’s also acknowledges that the group’s 2019 accounts received an unqualified opinion by Deloitte and understands that the appointment of KPMG as new auditor followed an extensive on boarding process, that there have been no accounting or auditing disputes between EG and Deloitte, and that Deloitte continues to audit the group’s Australian operations,” the agency added.
The Blackburn-based group has been downgraded to the corporate family rating to B3 from B2 and its probability of default from B2-PD to B3-PD.
A spokesperson for the Issa brothers speaking to the Telegraph said they strongly disagreed with Moody’s decision.
The brothers own more than 6,000 petrol stations across 10 countries with EG Group.
Last week it emerged that the group’s chief financial officer Michael Hughes reportedly considered quitting the petrol station empire following its acquisition of the Big 4 grocer.
According to a report by the Sunday Times, Hughes had planned to resign and take up a post at a different company by the end of the year, which would have raised further concerns among EG Group’s debt investors.
Nevertheless, Hughes has decided to stay with EG Group for an unspecified period.
The company said that Hughes had “not resigned, and nor does he intend to resign, as chief financial officer of EG Group”.