Supermarket Giant Faces £30m Increase by February
- Asda’s debt interest bill to exceed £400m by early next year due to rising interest rates
- £500m loans taken out for Issa brothers acquisition will switch from fixed to floating rates
- Currently, Asda has around £2.4bn of debt with accrued interest payments of £396m in 2022
- Mohsin and Zuber Issa acquired Asda in a highly leveraged £6.8bn deal in 2021
Asda is expected to see its debt interest bill surpass £400 million by early next year due to increasing interest rates. Asda’s Chief Financial Officer, Michael Gleeson, informed the Business and Trade Committee that the company’s debt bill could rise by up to £30 million by February. This is attributed to £500 million loans taken out for financing the Issa brothers’ acquisition of the supermarket, which will shift from fixed to floating interest rates. Mohsin and Zuber Issa acquired Asda in 2021 through a highly debt-laden £6.8 billion deal. Currently, Asda holds around £2.4 billion of debt with accrued interest payments amounting to £396 million in 2022. Mohsin Issa told the Committee: ‘What I would say in addition to Michael’s comments is that the leverage at the start of the year was 4.2 times. At September quarter end, it came down to 3.8 times, and on this trajectory, it will decrease even further by the end of this year. At the same time, we are investing in colleague pay and customer pricing, loyalty, and so on, so the business is highly cash generative.’
Factuality Level: 8
Factuality Justification: The article provides accurate information about Asda’s debt interest bill and its relation to rising interest rates, as well as quotes from Michael Gleeson and Mohsin Issa regarding the company’s financial situation and future projections. It also includes relevant background information on the acquisition of Asda by the Issa brothers.
Noise Level: 3
Noise Justification: The article provides relevant information about Asda’s debt interest bill increasing due to rising interest rates and the company’s current financial situation. It also includes comments from Mohsin Issa addressing the leverage and investments being made in the business. However, it lacks a deeper analysis or exploration of potential consequences and does not offer much actionable insights for readers.
Financial Relevance: Yes
Financial Markets Impacted: Asda’s debt interest bill
Financial Rating Justification: The article discusses Asda’s increasing debt interest bill due to rising interest rates, which impacts the company’s financial situation and its ability to invest in colleague pay and customer pricing.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There are no extreme events mentioned in the article, and the financial situation of Asda is not considered an extreme event as it’s a result of normal business operations.
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