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.”
Barclays will no longer sponsor Latitude, Download or Isle of Wight festivals after musicians and comedians dropped out in protest over the bank’s ties to the Israel-Hamas war.
Live Nation, the concert promoter, told Sky News: “Following discussion with artists, we have agreed with Barclays that they will step back from sponsorship of our festivals.”
Upcoming Live Nation festivals across the UK this summer include Latitude, Download and the Isle of Wight.
Barclays signed a five-year sponsorship deal with Live Nation in 2023. It’s not clear if the suspension will apply to all events up to 2028.
Comedians Joanne McNally, Sophie Duker, Grace Campbell, and Alexandra Haddow all announced they would be boycotting Latitude Festival last week.
Musicians including CMAT, Pillow Queens, Mui Zyu, and Georgia Ruth had also pulled out of the event.
Download Festival, which comes to Donington Park, Leicestershire this weekend, had seen acts including Pest Control, Ithaca, Scowl, Speed and Zulu pull out, also over the festival’s sponsorship.
‘Facilitating genocide’
In a statement on Instagram, Pest Control wrote: “We will not take part in an event whose sponsor profits from facilitating a genocide”.
Meanwhile, Ithaca wrote on X: “Whilst we hate letting anyone down, this moment of solidarity sends a powerful message to the organisers about where the younger generation of bands stand”.
A spokesperson for Barclays told Sky News: “Barclays was asked and has agreed to suspend participation in the remaining Live Nation festivals in 2024”.
Pic: Palestine Action/X
Barclays calls on ‘leaders’ to ‘stand united’ against activist pressure
Palestine Action, a group whose members attacked 20 of the bank branches across England and Scotland last week, has accused Barclays of having financial interests in both Israel’s weapons trade and fossil fuels.
The UK-based Palestine Solidarity Campaign has called for a general boycott of the bank, while the Palestinian-led Boycott, Divestment and Sanctions (BDS) movement has named Barclays as one of their “divestment and exclusion” targets.
Barclays’ statement went on: “The protestors’ agenda is to have Barclays debank defence companies which is a sector we remain committed to as an essential part of keeping this country and our allies safe.
“They have resorted to intimidating our staff, repeated vandalism of our branches and online harassment. The only thing that this small group of activists will achieve is to weaken essential support for cultural events enjoyed by millions.
“It is time that leaders across politics, business, academia and the arts stand united against this.”
Barclays has said while it provides financial services to “public companies that supply defence products to NATO and its allies” it does not directly invest in the firms.
Latitude Festival told Sky News: “Following discussion with artists, we have agreed with Barclays that they will step back from sponsorship of Latitude Festival”.
Comedians pull out en masse
Taskmaster star McNally, who had been set to close the Latitude Festival on Saturday wrote in an Instagram story last week: “I’m getting messages today about me performing at Latitude when it’s being sponsored by Barclays.
“I’m no longer doing Latitude. I was due to close the comedy tent on the Sunday night, but I pulled out last week.
“I’m on the old artwork but I haven’t been listed on the site since I pulled out a week ago.”
Comedian Duker had shared a photo of her at a previous Latitude Festival, and confirmed she would be boycotting the event.
She wrote: “I am committed to minimising my complicity in what I consider to be a pattern of abhorrent, unlawful violence”.
The 34-year-old comedian also said her pro-Palestinian stance “has gained me violent abuse, targeted pile-ons and death threats”.
Fellow comedian Grace Campbell, who is the daughter of Sir Tony Blair’s former spokesman Alastair Campbell, shared Duker’s post in an Instagram story, announcing she was also pulling out of the festival.
Meanwhile, comedian Alexandra Haddow said she too would no longer appear at Latitude, writing on Instagram: “I can’t in good conscience take the fee.”
In a post shared on her Instagram account last week, Irish singer-songwriter CMAT said she would boycott Latitude, writing: “I will not allow my precious work, my music, which I love so much, to get into bed with violence.”
Isle Of Wight Festival. Pic: AP
Campaign groups celebrate victory
In response to the exodus of acts, Barclays previously defended its position, saying it recognised “the profound human suffering” caused by the Israel-Hamas war.
“We provide vital financial services to US, UK, and European public companies that supply defence products to NATO and its allies,” it said in a statement published online.
“Barclays does not directly invest in these companies. The defence sector is fundamental to our national security and the UK government has been clear that supporting defence companies is compatible with ESG considerations.
“Decisions on the implementation of arms embargos to other nations are the job of respective elected governments.”
Bands Boycott Barclays declares victory
In response to Barclays stepping away, campaign group Bands Boycott Barclays, which has been leading the protests, wrote on Instagram: “This is a victory for the Palestinian-led global BDS (Boycott, Divestment, Sanctions) movement.
“As musicians, we were horrified that our music festivals were partnered with Barclays, who are complicit in the genocide in Gaza through investment, loans and underwriting of arms companies supplying the Israeli military.
“Hundreds of artists have taken action this summer to make it clear that this is morally reprehensible, and we are glad we have been heard.
“Our demand to Barclays is simple: divest from the genocide, or face further boycotts. Boycotting Barclays, also Europe’s primary funder of fossil fuels, is the minimum we can do to call for change.”
Last month, more than 100 acts dropped out of The Great Escape Festival in Brighton and Hove due to its ties to Barclays.
Climate campaigners also welcomed the move to suspend the Barclaycard sponsorship.
‘Rotten bank’
Joanna Warrington at Fossil Free London said: “Barclays is a rotten bank: artists, brands, clients, and customers are all abandoning Barclays because of the billions Barclays is ploughing into fossil-fuel companies like Shell and Israeli arms companies dropping bombs on innocent Palestinian children.
“This won’t stop until Barclays stops funding destruction.”
Greenpeace UK’s co-executive director Areeba Hamid said: “This bank is the biggest fossil-fuel funder in Europe, bankrolling oil and gas to the tune of billions of pounds, and has now been linked to arms companies involved in the conflict in Gaza.
“By putting an end to the greenwashing, festival organisers are sending a clear signal to Barclays that it’s time they took responsibility for the destructive industries they fund.”
Keep up with all the latest news from the UK and around the world by following Sky News
Festival sponsors face growing scrutiny
Barclays has confirmed that despite no longer being associated with the festivals, their customers with tickets will not be affected and their tickets will remain valid.
In a similar turn of events, Hay Festival dropped its sponsorship with investment management firm Baillie Gifford last month, after numerous celebrities pulled out due to the company’s links with fossil fuels and businesses linked to the Israeli defence industry.
Activist group Fossil Free Books urged high-profile figures to distance themselves from the literary event, which saw performers including comedian Nish Kumar, singer Charlotte Church and Labour MP Dawn Butler pull out.
While in March many artists refuse to play SXSW Festival in Austin, Texas, due to the event’s connections to the US army and weapons companies linked with the conflict.
Download Festival will be held in Donington Park, Leicestershire this weekend.
The Isle of Wight Festival will be held in Seaclose Park, Newport, between 20 – 23 June, headlined by The Prodigy, Pet Shop Boys and Green Day.
Tens of thousands of people are expected to attend Latitude Festival at Henham Park in Suffolk, held from the 25-29 July.
Two sandwich makers supplying UK supermarkets have recalled products because of an E.coli risk, the Food Standards Agency has said.
It’s a precautionary step a week after the UK Health Security Agency said an outbreak had forced some people into hospital.
Products from Boots, Asda, Tesco, Co-op, Aldi, Sainsbury’s and Amazon are part of the recall, said the Food Standards Agency (FSA).
Asda and Tesco stressed it was a precaution and said shoppers could return the products for a refund.
Greencore and Samworth Brothers Manton Wood are the companies that supplied the products.
It’s understood other manufacturers will issue their own recalls in the coming hours.
The FSA said it had narrowed the source “to a small number of salad leaf products that have been used in sandwiches, wraps, subs and rolls”.
Symptoms include “severe and sometimes bloody diarrhoea, stomach cramps, vomiting and fever”, said Trish Mannes from the UKHSA.
However, some cases can cause serous complications that can lead to kidney failure.
People are being advised to follow NHS.uk guidance if they become unwell.
“Washing your hands with soap and warm water and using disinfectants to clean surfaces will help stop any further spread of infection,” said Ms Mannes.
People who might be infected also shouldn’t prepare food for others and avoid work or school until 48 hours after symptoms stop.
Keep up with all the latest news from the UK and around the world by following Sky News
The UKHSA said cases had nearly doubled in the last week, with a further 98 bringing the total to 211.
Numbers are expected to rise as testing continues for more cases of the Shiga toxin-producing E. coli (STEC).
Based on 160 cases, 42% of people have needed hospital treatment, the UKHSA added.
Last week, it said cases were linked to a “nationally distributed food item” but didn’t give further details.
E.coli bacteria are normally harmless and live in the intestines of humans and animals. However some strains, like STEC, can make people very ill.
Full list of recalled products:
Aldi Chicken Fajita Triple Wrap
Use by: All dates up to and including 16 June 2024
by Amazon BLT Sandwich
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by Amazon Chicken & Bacon Layered Salad
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by Amazon Chicken Salad Sandwich
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by Amazon Ploughman’s Sandwich
Use by: All dates up to and including 16 June 2024
by Amazon Prawn Layered Salad
Use by: All dates up to and including 16 June 2024
Asda Smoky Beans and Cheddar Cheese Wrap
Use by: All dates up to and including 15 June 2024
Asda Chicken Salad (Sandwich)
Use by: All dates up to and including 15 June 2024
Asda Chicken & Bacon Club (Sandwich)
Use by: All dates up to and including 15 June 2024
Asda Brie, Bacon and Chilli Chutney (Sandwich)
Use by: All dates up to and including 15 June 2024
Asda BLT (Sandwich)
Use by: All dates up to and including 16 June 2024
Asda Vegan No Chick’n Caesar Wrap
Use by: All dates up to and including 15 June 2024
Asda Tuna Crunch Sub Roll
Use by: All dates up to and including 15 June 2024
Asda Southern Fried Chicken Wrap
Use by: All dates up to and including 15 June 2024
Asda Southern Fried Chicken Triple Wrap
Use by: All dates up to and including 15 June 2024
Boots BBQ Chicken wrap
Use by: All dates up to and including 16 June 2024
Boots BLT (Sandwich)
Use by: All dates up to and including 16 June 2024
Boots Cheddar Cheese Ploughman’s (Sandwich)
Use by: All dates up to and including 16 June 2024
Boots Chicken & Bacon Caesar Wrap
Use by: All dates up to and including 16 June 2024
Boots Chicken Salad (Sandwich)
Use by: All dates up to and including 16 June 2024
Boots Chicken Triple (Sandwich)
Use by: All dates up to and including 16 June 2024
Boots Delicious Ham & Cheese Ploughman’s (Sandwich)
Use by: All dates up to and including 16 June 2024
Boots Halloumi & Greek Style Salad wrap
Use by: All dates up to and including 16 June 2024
Boots Ham & Egg Club (Sandwich)
Use by: All dates up to and including 16 June 2024
Boots Mixed Triple (Sandwich)
Use by: All dates up to and including 16 June 2024
Boots Southern Fried Chicken Wrap
Use by: All dates up to and including 16 June 2024
Boots Spicy Bean & Cheese Wrap
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Boots Vegan No Chicken Salad (Sandwich)
Use by: All dates up to and including 16 June 2024
Boots Vegan No Duck & Hoisin Wrap
Use by: All dates up to and including 16 June 2024
Boots Veggie Triple (Sandwich)
Use by: All dates up to and including 16 June 2024
Co-op Vegan Gro Onion Bhaji (Sandwich)
Use by: All dates up to and including 16 June 2024
Co-op Mexican Style Bean & Cheese Wrap
Use by: All dates up to and including 16 June 2024
Co-op Ham, Cheese & Pickle (Sandwich)
Use by: All dates up to and including 16 June 2024
Co-op Ham & Cheese Wrap
Use by: All dates up to and including 16 June 2024
Co-op Chicken & Bacon Caesar Wrap
Use by: All dates up to and including 17 June 2024
Co-op Bacon, Lettuce and Tomato (Sandwich)
Use by: All dates up to and including 16 June 2024
Morrisons Chicken Salad (Sandwich)
Use by: All dates up to and including 16 June 2024
Morrisons Chicken Salad PFS (Sandwich)
Use by: All dates up to and including 16 June 2024
Morrisons Gluten Free Chicken Salad (Sandwich)
Use by: All dates up to and including 16 June 2024
Morrisons Gluten Free Sandwich Platter
Use by: All dates up to and including 16 June 2024
OneStop Tuna Crunch Sub
Use by: All dates up to and including 16 June 2024
OneStop Chicken Salad Sandwich
Use by: All dates up to and including 17 June 2024
OneStop Hoisin Duck Wrap
Use by: All dates up to and including 17 June 2024
OneStop Chicken Bacon & Lettuce Sandwich
Use by: All dates up to and including 17 June 2024
Sainsbury’s Kitchen Deli Peri Peri Chicken Wrap
Use by: All dates up to and including 16 June 2024
Sainsbury’s Kitchen Deli BBQ Pulled Pork & Red Leicester Wrap
Use by: All dates up to and including 16 June 2024
Sainsbury’s Kitchen Deli Chicken, Bacon & Avocado Focaccia (Sandwich)
Use by: All dates up to and including 16 June 2024
Sainsbury’s Kitchen Deli Greek Style Wrap
Use by: All dates up to and including 16 June 2024
Sainsbury’s Kitchen Deli Jerk Halloumi Wrap
Use by: All dates up to and including 16 June 2024
Tesco Chicken Salad Sandwich
Use by: All dates up to and including 16 June 2024
Tesco Chicken Salad Sub
Use by: All dates up to and including 16 June 2024
Tesco BBQ Chicken Wrap
Use by: All dates up to and including 16 June 2024
Tesco Hoi Sin Duck Wrap
Use by: All dates up to and including 16 June 2024
Tesco The Chicken Club Sandwich
Use by: All dates up to and including 16 June 2024
Tesco Tuna Crunch Sub
Use by: All dates up to and including 16 June 2024
Tesco Spicy Bean Wrap
Use by: All dates up to and including 16 June 2024
Tesco Chicken Bacon & Lettuce Sandwich
Use by: All dates up to and including 16 June 2024
Tesco Fajita Chicken Wrap
Use by: All dates up to and including 16 June 2024
Tesco Summer Edition Greek Style Chicken Gyros Wrap
Use by: All dates up to and including 16 June 2024
The Gym Kitchen Peri Peri Chicken Chilled Wrap
Use by: All dates up to and including 16 June 2024
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