Supermarket group Asda is taking on a further £500mln of debt after the agreement to sell its petrol forecourts to EG Group was terminated.
Both Asda and EG Group are owned by the Issa brothers Zuber and Mohsin and TDR Capital after the supermarket group was bought from Walmart for £6.8bn.
The deal to sell the Asda forecourts to EG Group for £750mln was announced in February. However, it was not until the restrictions imposed on the Issa brothers and TDR by the UK Competitions and Markets Authority were lifted in June that EG was able to assess the commercial information relating to Asda’s forecourts business.
The companies said this resulted in several changes to the financial evaluation of the planned sale and as a result, EG and Asda have decided to terminate the deal.
Asda said it plans to settle the forecourts bridge facility through a combination of £250m cash on hand and £500mln of senior secured debt, while EG will redeem a £675mln bond.
The supermarket group said it will retain the petrol forecourts business and the associated financial contribution.
“The forecourts have been an important footfall driver to the business, supported by its position as a price leader in the supermarket fuel sector,” Asda said.
It added that it is confident of deriving synergies from plans to open Asda convenience stores at EG forecourts in the UK.
It intends to open 28 new Asda On the Move convenience stores at EG forecourts this year, with a target of 200 by the end of next year and the opening of further sites in 2023.