// Billionaire Asda buyers’ junk bond sale raises £2.75bn for takeover deal
// The bond is part of the debt arrangements & asset disposals to plug the £6.8bn takeover of Asda
The billionaire Issa brothers and their private equity partners have reportedly undertaken a record sterling junk bond sale to help fund their acquisition of Asda.
According to the Financial Times, Mohsin and Zuber Issa, along with TDR Capital, sold £2.75 billion worth of debt through the bond.
The bond is part of the debt arrangements and asset disposals to plug the £6.8 billion takeover of Asda, and means the buyers only need inject a small amount of equity themselves.
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However, the bond issue attracted orders of more than £8 billion from investors due to Asda’s low debt burden and the £9 billion worth of property involved in the takeover deal.
“We are pleased to have secured debt financing for the acquisition of Asda at attractive rates, following exceptional levels of investor demand,” The Issa brothers and TDR Capital told FT.
“The debt financing forms part of a robust capital structure that we are putting in place for Asda to support and accelerate the growth strategy for the business.”
Earlier this month the Issa brothers posted an update around their £6.8 billion takeover of Asda, highlighting details around the grocers’ forecourt business and the initial names of the new board of directors.
News of Asda returning to British ownership for the first time in 21 years was first announced in October last year.
The Issa brothers said the takeover process was now on track to be complete by late February and they have have reached an agreement with US retail giant Walmart, which will retain a minority interest in the Big 4 grocer.
Mohsin and Zuber Issa also confirmed that Asda’s forecourts business would be sold to EG Group for the value of £750 million. The forecourts will continue to be branded Asda.
EG Group is the global convenience and forecourts retailer owned by the Issa brothers and TDR Capital.
Meanwhile, the Issa brothers and TDR Capital were to launch the syndication of €840 million (£729 million) of institutional term loan B facilities and, later, the offering of £2.2 million of senior secured notes and £500 million of senior notes.
The takeover deal still remains subject to clearance from the CMA, which is currently expected in the second quarter this year.
The Issa brothers and TDR Capital said that following the CMA’s clearance, they plan to sell certain distribution assets to institutional real estate investors.
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