Asda reveals higher finance costs as boss defends debt structure
Asda faces increased interest payments of at least £30m from February as loans taken on by the billionaire Issa brothers to fund the £6.8bn purchase of the supermarket start to become due.
Mohsin and Zuba Issa, who made their names founding the EG petrol station group, bought the Asda chain from Walmart in 2021 in a heavily leveraged takeover that has drawn scrutiny from MPs and unions.
In October, Asda in turn bought the EG group in a £2bn deal.
Addressing MPs on the business and trade select committee, Mohsin Issa insisted that despite the sharp increase in the cost of borrowing in the last 18 months, the supermarket group is stable and financially sound.
“We can give you the confidence that it is run properly,” Mr Issa said.
“What I would say is that the debt leverage at the start of the year was at 4.2 times, that has gone down to 3.8 times and that trajectory is to go down even further by the end of this year.
“At the same time, we are investing in colleague pay, customer pricing and loyalty. The business is highly cash generative.”
Asda’s chief financial officer Michael Gleeson told MPs total debt within the Asda company hierarchy was £4.2bn, £500m of which will become due in February and switch to a floating rate that will add “at least £30m” to financing costs.
He said the remainder of the debt is fixed until February 2026.
Mr Issa also faced questions about the company’s labyrinthine and opaque structure, which has 16 different entities between the owners and the supermarket operating company, many of them registered offshore.
The Issa brothers and their family own 45% of the company, with Walmart retaining a 10% stake, and the remainder owned by TDR Capital, the private equity group with whom the brothers funded the takeover.
Mohsin Issa gives evidence to MPs
“A structure like this is not unusual for a large corporation like Asda. All of these companies are tax registered and pay tax in the UK,” Mr Issa said.
Of the other major supermarkets Morrisons was the subject of a £6bn leveraged takeover last year, Tesco and Sainsbury’s are both publicly listed, while Lidl and Aldi are privately owned in Germany.
Mr Issa conceded that in line with the model of private equity, at some stage TDR Capital would seek to exit. “At some point they will want to go but from the conversations I have had with them, they are long-term investors.”
He also gave MPs an insight into his journey from owning a single forecourt with his brother to running a multi-billion pound retail empire.
“We started with a single petrol station, I washed the restrooms, I manned the tills when I needed to, back then these were places you could not get a snack, it was just gas, and mainly distressed sales,” he said.
“We have the vision of transforming that, we were the first to have Subway in our stations, the first to have Starbucks… we had a mission to transform that tired and sleepy industry.”
Read more:
Asda co-owner mauled by MPs on fuel prices and ‘fire and re-hire’
Earlier the GMB union told MPs it was concerned that “debt levels and the interest payments” at Asda could impact workers in its supermarkets.
Nadine Houghton, national officer for the union, said: “From an Asda perspective, we see a dramatic drop in hours available for shop floor workers, which is intensely increasing the pressure on them, their mental health.
“We’ve seen cuts to the cleaning contract, so we have concerns over the level of cleanliness and maintenance. Violent attacks on our members are up and there are unrealistic productivity measures.
“Really, I think this is a result of the fact that private equity have to pay this back somehow – one of the ways we believe they’re seeking to do this in Asda is through some of these examples we are seeing from the shop floor.”
More than 200 UK pubs closed in the first half of the year as part of a “heartbreaking” trend which industry bosses fear is set to accelerate.
Analysis of government figures revealed 209 pubs were demolished or converted for other uses over the opening six months of 2025 – around eight every week.
The South East was hit the hardest, losing 31 pubs during the period.
It means 2,283 pubs have vanished from communities across England and Wales since the start of 2020.
Industry bosses said the “really sad pattern” is being driven by the high costs faced by pubs – and called for government reforms to business rates and beer duty.
Many pubs have been hit by changes to discounts on business rates, the property tax affecting high street businesses.
Hospitality businesses received a 60% discount on their business rates up to a cap of £110,000 – but this was cut to only 25% in April.
Please use Chrome browser for a more accessible video player
July 2025: ‘Not surprising pubs are closing’
Pub owners had warned such a move would place significant pressure on their industry.
Last month, the owner of a pub told Sky News “you can’t make money anymore” and “it’s not surprising so many pubs are closing at an alarming rate”.
‘Staying open becomes impossible’
A rise in the national minimum wage and national insurance payments have also increased bills for pubs.
Alex Probyn, of commercial real estate specialists Ryan, which analysed the government data, said the higher costs are “all quietly draining profits until staying open becomes impossible”.
He added: “Slashing business rates relief for pubs from 75% to 40% this year has landed the sector with an extra £215m in tax bills.
“For a small pub, that’s a leap in the average bill from £3,938 to £9,451 – a 140% increase.”
Read more from Sky News:
Sharp rise in disabled people facing homelessness
Nearly 2,000 soldiers fighting Spain fires
‘A lot of these pubs never come back’
Emma McClarkin, chief executive of the British Beer And Pub Association, said: “It’s absolutely heartbreaking and there is a direct link between pubs closing for good and the huge jump in costs they have just endured.
“Pubs and brewers are important employers, drivers of economic growth, but are also really valuable to local communities across the country and have real social value.
“This is a really sad pattern, and unfortunately a lot of these pubs never come back.
“The government needs to act at the budget, with major reforms to business rates and beer duty.”
Soho House, the global network of private members’ clubs, is being bought by a group led by hotel owners MCR – valuing the business at $2.7bn (£1.99bn).
The deal will take the London-based hospitality group back into private ownership, meaning it will no longer be listed on the New York Stock Exchange.
Actor-turned-investor Ashton Kutcher will lead a consortium providing new funding to the business – and will join Soho House’s board of directors once the transaction is complete.
Money latest: Michelin restaurant launches water menu
Ashton Kutcher. Pic: AP
MCR is the third-largest hotel owner-operator in the US and owner of the BT Tower in London.
But current shareholders – billionaire executive chairman Ron Burkle and his private equity company Yucaipa – will retain their majority controlling stakes, as will founder Nick Jones.
Private equity firms acquire businesses, invest to improve financial performance, and seek to then sell them for a profit.
Holders of common stock of the company will receive $9 cash per share, far above the closing price on Friday afternoon.
Soho House’s share price rose 16% in pre-market trading to $8.86.
It was founded in London in 1995 by Mr Jones, a restaurateur, as a meeting place for creative people.
The club developed operations in Europe, North America and Asia and is known for stylish interiors and exclusivity.
Despite only going public in 2021 the company appointed a committee to explore taking the company private as it struggled to turn a profit.
An offer had been received in December.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike