Asda chief Mohsin Issa looks to shrug off debt fears in grilling from MPs
The billionaire co-owner of Asda, Mohsin Issa, has defended the firm’s complex corporate structure and mounting debt pile amid growing concerns from MPs over its management.
Issa, who took control of Asda with brother Zuber in a debt-fuelled £6.8bn swoop in 2021, shrugged off concerns over its leverage and sprawling ownership model when quizzed by the business and trade committee today.
The boss of the UK’s third largest grocer said nobody should be concerned about its debt despite confirming it has £4.2bn on its books.
“What I would say is that the debt leverage at the start of the year was at 4.2 times, that has gone down to 3.8 times and that trajectory is to go down even further by the end of this year,” Issa told MPs.
Speaking alongside Issa, Asda finance chief Michael Gleeson said a portion of its debt would also face a hike in rates next year which will add £30m to its interest costs.
The grilling comes amid growing concerns over the structure of the business and suggestions it was using Jersey-based vehicles for tax purposes. The firm’s ownership involves 24 separate companies, some of which are registered in Jersey and others in England and Wales.
In a letter to the committee’s chair Liam Byrne last week, the brothers said: “No companies in the Asda ownership structure are incorporated in jurisdictions outside of England and Wales due to any ‘tax haven’ status.”
Gleeson defended the use of holding companies based in Jersey, stressing that it pays UK corporation tax on all its operations and claiming that Jersey-based firm can “facilitate corporate restructurings more quickly than can happen in England and Wales,” he said.
Registering the firms in Jersey could also cut its exposure to stamp duty upon selling any parts of its business, adding that this process can also take place through UK-based companies, but will be a slower process, he added.
Scrutiny of the firm has been growing since the brothers snapped up the grocer in 2021 in a debt-heavy buyout with backing from private equity group TDR Capital. Rapid rate hikes have placed heavily indebted businesses under strain in the past 18 months.
The increased grilling comes days after reports that rival retailer Morrisons, which was bought by US private equity firm CD&R, told staff it needs an urgent overhaul as it seeks to improve its finances in the face of a growing debt burden.