Tesco (LON:TSCO) has confirmed the sale of its South Korean business Homeplus to a group led by private equity group MBK Partners for US$6.4bn (£4.2bn).
The supermarket group will receive net cash of £3.35bn, while overall debt will be reduced by £4.26bn.
Homeplus made a loss of £131mln in the year to February on sales of £5.4bn with an underlying profit of £466mln.
Dave Lewis, Tesco’s chief executive, said: "After a highly competitive process, we are announcing today the proposed sale of Homeplus, our business in the Republic of Korea.
“This sale realises material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet.
Completion is expected in the final quarter of this year if regulatory approval is received.
Tesco recorded the largest loss ever seen by a UK company in April after huge property write-offs and the costs of a accounting scandal that sparked a wholesale management overhaul.
Debts will fall to around £17.5bn following the disposal and will fall again once the group completes the sales of its Dunnhumby market research operation.
This business is proving harder to sell, though, with initial hopes of more than £2bn being raised now trimmed back to well under £1bn according to recent reports.
MBK Partners consortium includes Canada Pension Plan Investment Board, Public Sector Pension Investment Board and Singapore group Temasek Holdings.