EG Group has completed the sale of the majority of its UK & Ireland fuel, foodservice, grocery, and merchandise business to Asda for a cash consideration of £2bn.
The group has further announced the launch of up to a $500m Term Loan B add-on to its existing term loans due February 2018, with further refinancing to follow.
Proceeds from the transaction will be used to partially refinance remaining 2025 debt maturities.
The group will continue to operate 32 sites in the UK as well as operating in the USA, Australia, Germany, France, Italy, the Netherlands, Luxembourg, and Belgium.
Under the terms of its deal with Asda, the company will also retain foodservice brands including Cooplands – its wholly owned bakery business – and franchise businesses with the Starbucks, KFC, Sbarro, Chaiiwala, and Cinnabon brands, reflected in the final purchase price.
The deal strengthens EG Group’s platform to further invest in its strategy to roll out foodservice, grocery, and merchandise to create multipurpose convenience retail sites across its international estate.
The group will also continue its strategy to deploy emerging fuels and EV chargers, under its proprietary brand- Evpoint – across the existing site network as well as third party locations.
The £2bn proceeds from the transaction, the net proceeds of £1.1bn from the recent sale and lease back transaction in the US, and the £35m net proceeds from the non-core US asset disposal will be used to repay debt.
This will enable the group to significantly reduce net leverage, in line with the previously announced financial policy and deleveraging strategy.
The completion of the UK transaction allows the group to complete the process to successfully amend and extend the remaining £3.2bn (£2.6bn) of its term loans through the extension of the maturity date toe February 2028, which was priced and allocated in June.
The group remains committed to addressing its remaining maturities within 12-15 months of their maturity dates and achieving a net leverage multiple of mid four times in the near to mid-term.
EG Group’s offices in Blackburn, UK, will remain its global headquarters and a shared service centre for the group, which generates over $25bn (£21bn) of annual revenue and more than $1bn (£82m) of EBITDA.
Zuber Issa CBE, co-CEO and co-founder of EG Group, said: “The sale of the majority of EG Group’s UK business to Asda represents an important strategic step for the company, enabling EG to support the continued roll out of its successful convenience retail, fuel and foodservice strategy and drive innovation to transform the consumer experience. This includes the ongoing investment and expansion of the EV charging business, evpoint, as well as hydrogen and other sustainable fuel retail infrastructure, which we continue to see as a significant future opportunity.
“Following this transaction and the successful extension of the debt maturities to February 2028, EG Group will benefit from a sustainable capital structure from which to build for the future.
“I would like to thank all EG colleagues for their continued hard work and thank those who are transferring to Asda for their contribution to the success of EG and wish them well for the future. We look forward to executing our 2024 strategy with confidence.”
Lord Stuart Rose, chairman of EG Group, said: “The transaction is an important milestone for both companies. EG Group can focus on international growth underpinned by its strengthened balance sheet, whilst Asda can accelerate its convenience rollout on proven, well-invested sites.
“There is now a clear opportunity to grow and build the international business whilst ensuring EG plays a pivotal role in the energy transition.”
