Mohsin and Zuber Issa have bought Asda, the UK's third largest supermarket, in a £6.8bn deal in 2021. Credit: John Super
Members of Parliament asked Asda's billionaire owners to talk about interest-free loans allegedly made to finance the purchase of private jets.
Darren Jones, Chairman of the Business and Trade Select Committee, wrote to Mohsin Issa, who owns Asda with his brother Zuber, question the «complex» structure of the brothers' business empire and question specific financial transactions.
Issa's financial audit was prompted by fears that the company's complex structure and high debts could cause Asda customers to face prices that are higher than necessary.
Darren Jones, Chairman of the Board of Directors of Business and Trade The committee asked Mr. Issa for detailed answers to nine questions about the finances of Asda and EG Group.
Prior to the acquisition of Asda, Issas owned the EG gas station group. Subsequently, this year the supermarket bought the British business of the Issa forecourt empire for £2.3bn.
Mr Jones requested details of loans worth «tens of millions of euros» that were reportedly given to the brothers. EG Group to buy private jets.
Last October, the Financial Times reported that in 2018, EG Group provided €39 million in unsecured loans to Isle of Man companies owned by the brothers. Through these companies, the brothers own two private jets, the newspaper reported.
Mr. Jones asked Mr. Issa whether interest-free loans were used to purchase the aircraft reported, whether TDR Capital partners and EG bondholders were aware of these arrangements, whether interest was added to the loans at a later date, and whether debts were repaid. following the sale of EG to Asda.
Mr. Jones wrote: «These questions will help us understand whether you are allowing Asda to do everything possible to reduce costs in a time of rising cost of living.» crisis.»
The letter comes after a committee pulled Issa out of the woods during a stormy evidence meeting in July, during which the executive was questioned about Asda's fuel prices and employment practices.
Mr Jones accused Issa of not answering questions during the hearing. He told him, «We've been walking around for an hour and you're not answering this commission's questions.»
Asda and other supermarkets have been criticized for making high profits on fuel. The & Earlier this year, the Markets Authority (CMA) found that Asda's profitability targets at gas stations have tripled since 2019.
Mohsin and Zuber Issa bought Asda, the UK's third-largest supermarket, in a £6.8bn deal in 2021 backed by private equity firm TDR Capital.
The takeover and subsequent deal with EG burdens Asda debt. Asda's latest estimate is about £7.5 billion in debt.
3105 ASDA Debt
This has raised concerns that the chain will have less ability to invest in keeping prices low for customers as the cost-of-living crisis drags on.
The Issa brothers have spent much of the past year selling off assets to cut costs. debts piled up as they expanded their retail empire.
In addition to selling EG's UK business to Asda, EG recently sold its US convenience store portfolio to American chain Casey's for an undisclosed sum. .
Mr. Jones wrote: «The committee is concerned that the complex structure of the company that Asda is based in and the associated financing decisions may limit your ability to help manage the cost-of-living pressures of your customers.»
«This intercompany deal between Asda and EG Group is supposed to be simply taking money from Asda to pay off some of the debt you incurred when you bought Asda in the first place.»
An Asda spokesperson said: «Since As stated earlier, Asda will continue to fully cooperate with the Business and Trade Committee's request and respond to their follow-up questions.
«Asda's owners are committed to long-term sustainable business growth and invest in supporting customers and colleagues during these difficult times.»
Asda has publicly committed to invest £36 million in price cuts over the past two months.
It also introduced the Kids programme. «Eat for 1 pound» in July 2022 in supermarket cafes. Asda says it has served 2 million children's meals since the offer was launched and has invested £1.3 million to keep prices at £1.
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