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Asda is set to see its debt interest bill exceed £400m by early next year as a result of rising interest rates.
The company’s chief financial officer Michael Gleeson told the Business and Trade Committee that its debt bill would rise by up to £30m by February.
This is because £500m of loans taken out to aid the Issa brothers acquisition of the supermarket will switch from fixed to floating interest rates.
Mohsin and Zuber Issa acquired Asda in 2021 in a highly debt leveraged £6.8bn deal.
The company currently has around £2.4bn of debt which accrued interest payments of £396m in 2022.
Mohsin Issa told the Committee: “What I would say in addition to Michael’s comments is
that the leverage at the start of the year was 4.2 times. At September quarter end, it came down to 3.8 times, and on this trajectory it will go down even further by the end of this year. At the same time, we are investing in colleague pay and customer pricing, loyalty and so on, so the business is highly cash generative.”
