Article/Intelligence
Asda Premarkets £2.65B-Equivalent Senior Secured Offering Including New £1.35B-Equivalent 7Y TLB, Seeks RCF, TLA Extension to Refi 2025, 2026 Maturities
U.K. supermarket chain Asda is premarketing a £2.65 billion-equivalent senior secured debt package to refinance its 2025 and 2026 maturities. The deal comprises a new £1.35 billion-equivalent seven-year term loan B split into sterling and euro tranches, as well as £1.3 billion other senior secured euro and sterling debt. Asda is also in talks with its key relationship banks to extend its £667 million RCF and £166 million term loan A, which it expects to complete before commitments on the new term loan B are due, sources said.
The proceeds together with £415 million cash on balance sheet will enable Asda to repay its existing £740 million term loan B as well as £1.75 billion of its 3.25% 2026 SSNs and its £500 million 4.5% 2026 SSNs. Net leverage will inch up to 3.1x from 3x as a result of transaction costs, based on £1.264 billion 2023 pro forma adjusted EBITDA.
The deal has been premarketing Monday, April 15 and today, Tuesday, April 16, with feedback due on Thursday, April 18, sources said.
Asda grew revenue 4.7% year over year in 2023 to £25.6 billion, while adjusted EBITDA rose 24% year over year to £1.078 billion. The £1.264 billion pro forma adjusted EBITDA figure includes £86 million of synergies from Asda’s acquisition of 354 petrol filling stations from EG Group UK&I, which it completed in October 2023, and the acquisition of 116 Co-op convenience sites with petrol filling stations attached, which it completed in October 2022, as well as £159 million of LTM EBITDA annualizations, which was partly offset by £59 million of EG UK sale-and-leaseback ground rent annualizations.
Asda is the third-largest grocery retailer in the U.K., with a roughly 14% market share. The group owns around £8.5 billion of real estate, of which £756 million has been pledged as collateral under the group’s Ground Rent Facility. Food accounted for 73% of its 2023 revenue, with fuel accounting for 14%, clothing for 6% and general merchandise for the remaining 6%.
Asda is 50% owned by the Issa brothers and 50% by TDR Capital.
Asda’s December 2023 pro forma capital structure pre and post transaction is below:
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