EG Group, the petrol forecourt group whose owners control Asda, has sold $1.5bn worth of property in the US to bring down the firm’s debt burden amid soaring interest rates.
The portfolio – which EG America will continue to operate and trade – comprises 415 store assets under the Cumberland Farms, Fastrac, Tom Thumb and Sprint banners. EG Group stated that it had received a high degree of interest from multiple investors and attractive terms for the transaction.
The deal with property company Realty Income will see EG Group lease the assets back for an annual rental fee of $103m.
The company stated that the move, which represents a sale of around 15% of its property empire, was part of its “commitment to reduce total net leverage through debt reduction and free cash flow generation.”
Zuber Issa, co-founder of EG Group, commented: “Today’s announcement demonstrates the progress we continue to make to put in place a robust capital structure for the medium term that will underpin our long-term strategy and represents an important first step in this process.”
EG Group has debts of around $9bn of debt, with it facing interest payments running into the hundreds of millions after rates rose to tackle inflation.
NAM Implications:
- Given its $9bn debt and interest rates heading towards 5%+
- This means an annual interest bill of $450m.
- Whilst sale & leaseback means substituting rental for interest payments…
- …along with up to 25 year locking to lease arrangements.
- Watch this space…
