Issa Brothers Plan Debt Deal for Asda Assets After Buying Stores

Gas-station and convenience-store operator EG Group, owned by British brothers Zuber and Mohsin Issa, is readying another massive debt sale, this time to fund its purchase of the remaining assets of U.K grocer Asda.

EG Group approached investors this week to test appetite for the equivalent of 1.5 billion pounds ($2.1 billion) of high-yield bonds and leveraged loans, according to people familiar with the matter. The deal, which will be led by Barclays Bank Plc, is expected to launch as soon as this week following EG’s earnings results due Thursday.

The Blackburn-based company agreed to buy some of Asda’s assets, including its gas stations, car washes and ancillary land for 750 million pounds. It also agreed to buy OMV’s German Gas Stations for 485 million euros in December.

Read More: EG Group To Sell Bonds, Loans for Asda Assets This Week

The two British brothers tied up with TDR Capital LLP to raise 3.69 billion pounds of debt financing for their takeover of Asda earlier in the month. The Issas and TDR struck a deal with Walmart Inc. to take control of the U.K grocer in October, with the U.S. giant keeping a stake and contributing 500 million pounds of equity.

EG Group, which has fueled its expansion at break-neck speed by tapping debt markets in recent years, was bought by the Issas in 2001 and is now part-owned by sponsor TDR Capital.

The brothers and TDR Capital are also said to be in talks to buy more than half of coffee chain’s Caffe Nero’s 350 million pounds ($491 million) of loans, the Telegraph reported earlier this week.

A spokesperson at EG Group declined to comment on the new financing plans, and representatives for Barclays did not immediately respond to a request for comment.

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