Gas station and retail company EG Group’s second-quarter sales fell as the billionaire Issa brothers worked to reduce the company’s debt.
Sales fell 18% to $7.3 billion in the three months to the end of June, while profit before tax fell 4% to $335 million, which the company blamed on “the impact of the revaluation of oil inventories due to oil price volatility”.
EG Group said it cut its debt by 41% through a combination of sale-and-leaseback deals in the US and the sale of most of its UK business to Asda, which the couple also owns. In addition, the maturity of several loans totaling $6.1 billion was extended.
Co-founder Zuber Issa said: “The group has continued to make good progress with its deleveraging strategy… to create a sustainable, long-term capital structure.”
He added that the company is committed to achieving a net leverage multiple of mid-four times and targeting short-term maturities no later than 12 to 15 months prior to maturity. Interest rates on the group’s multibillion-dollar loans have jumped since last year as the majority are tied to central bank interest rates, which have risen 5% in Britain.
In May, the brothers marked a major milestone in their bid to reduce their business empire’s heavy debt load when they finalized plans to merge the UK operations of petrol station company EG Group with Asda in a £2.3bn deal.
EG said the deal with Asda is expected to reduce total net debt from $9,801 million in March 2023 to $5.4 billion post-merger.
Chairman Stuart Rose told reporters that the main purpose of the deal was to expand Asda’s operations, but “if it also gives you the opportunity to reduce your debt, then what’s the problem with that?”
In August, EG said it had divested 63 locations in Kentucky and Tennessee as part of a deal with U.S.-listed Casey’s General Stores. Terms of the sale were not disclosed.
Earlier this year there were rumors that the pair would make a bid to take over sandwich company Subway.
https://www.standard.co.uk/business/eg-group-sales-slide-18-as-billionaire-issa-brothers-work-to-slash-debt-b1105876.html EG Group’s sales are falling as the billionaire Issa brothers work to reduce debt