Morrisons under growing pressure as buyout debt costs pile up

Morrisons
// CD&R must refinance bridging loans at higher price than expected following its takeover of Morrisons
// CD&R has assured investors that it will not move away from the grocers traditional model to foot the bill

Clayton, Dubilier & Rice (CD&R), the private equity owner of Morrisons, has looked to ease investor and supplier fears that they would renege on commitments to the supermarket’s traditional business model, as the retailer faces down a mounting interest bill from lenders.

CD&R, which won a £10 billion bidding war for Morrisons in October, is facing rising interest payments on bridging loans as rising inflation and interest rates increasingly stretch the grocer’s balance sheet, The Sunday Telegraph first reported.

Investors raised concerns during the bidding war that CD&R would shift away from Morrisons traditional savvy spending, dislike of debt and commitments to British farming.


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However CD&R has already assured investors that it will not move away from the model to foot the bill.

A spokesperson said this weekend: “CD&R values Morrisons’ distinctive business model and is committed to supporting it.”

The commitment follows assurances during the bidding war last year that CD&R recognised the importance of Morrisons business model, committing to invest in its supply chain and “nurture the relationships with its supplier network.”

Morrisons is the largest customer of British farming and works directly with 3,000 livestock farmers and 200 growers.

The assurance will look to soothe any fears from the chain’s farming suppliers after Asda abandoned a commitment to sell 100 per cent British beef due to high prices.

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3 COMMENTS

    • Excellent, well put. Not even six months in and things are beginning to look shaky. Private Equity firms with their leveraged buyouts usually bail out between four and six years. Sometimes shorter and very very rarely longer.

  1. Another Good English business in the process of being asset striped by American investors, what a sad day for it customers and suppliers

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