Yahoo Finance Billionaire Issa brothers sell dozens of US convenience stores in battle to pay down debt
The billionaire owners of Asda and petrol station giant EG Group are selling off a swathe of convenience stores in the US as they race to pay down billions of pounds of debt.
Mohsin and Zuber Issa have offloaded 63 EG Group-owned shops in Kentucky and Tennessee to the American chain Casey’s General Stores for an undisclosed sum.
The brothers have been selling off assets to reduce debts racked up from the huge expansion of their retail empire.
EG Group’s debts stood at $9.67bn (£7.6bn) at the end of 2022, according to company accounts.
Zuber Issa said: “For EG Group, this divestment also represents another important step in executing our deleveraging strategy.”
It came as Moody’s warned on Tuesday that Asda, which the Issas bought for £6.8bn in 2021, was facing pressure amid fierce competition in the grocery sector.
The credit rating agency said the retailer faced risks related to the execution of its recent £2.3bn purchase of EG Group’s forecourts business in the UK and Ireland.
The brothers sold the division to Asda earlier this year for £2.3bn to help pay down EG’s debt.
But in doing so, it loaded Asda with £770m of high interest loans and relied upon a £450m cash injection from shareholders.
Moody’s placed Asda’s current debt pile at £7.5bn.
As interest rates increased, so has the cost of servicing large debt piles – heaping pressure on businesses which are highly leveraged.
However, Asda chairman Lord Stuart Rose has defended the supermarket’s acquisition of EG’s forecourts business.
He said earlier this year: “The business will grow. Debt over time comes down. And we believe this is a fully sustainable financial position to be in the capital structure.”
EG Group said in June that it expects its net debt to fall to $5.4bn once the Asda and other transactions complete later this year.
The Blackburn-born Issa Brothers, who own more than 6,600 petrol stations and stores across the UK, Europe, the US and Australia, founded the business in Bury, Greater Manchester, 22 years ago.
They financed a rapid expansion over the last decade with mountains of debt, taking advantage of low interest rates.
As well as Asda, they also acquired healthy fast food chain Leon for £100m in 2021.
Asda recently revealed that its like-for-like sales, excluding fuel, rose by almost 10pc to £5.4bn from April to June, compared to the same period last year.
It said that sales across its value range, Just Essentials, had grown by 87pc year-on-year as British households cut back on their spending due to the cost of living crisis.
