Billionaire Asda Owners Under Scrutiny Over Private Jet Loans

MPs Question Billionaire Asda Owners on Interest-Free Loans for Private Jets

In a bid to unravel the intricate financial web surrounding the billionaire owners of Asda, MPs have directed their focus on interest-free loans purportedly used to finance the acquisition of private jets. Darren Jones, chair of the business and trade select committee, has dispatched a letter to Mohsin Issa, one of the proprietors of Asda along with his brother Zuber, seeking clarifications on the “complex” structure of the Issa brothers’ business empire and specific financial transactions.

This heightened scrutiny comes amid concerns that the labyrinthine corporate structure and substantial debts could potentially lead to higher prices for Asda customers. Mr. Jones has articulated a series of probing questions, seeking transparency on the finances of both Asda and EG Group, the Issas’ former petrol station enterprise, which was subsequently acquired by Asda in a £2.3 billion deal earlier this year.

Key Points

  • Loans for Private Jets: Mr. Jones has inquired about loans reportedly amounting to “tens of millions of euros” granted by EG Group to the Issa brothers for the purchase of private jets. Last October, the Financial Times disclosed that EG Group extended €39 million in unsecured loans to Isle of Man-based companies owned by the brothers in 2018, with the funds allegedly utilized to acquire the private aircraft.
  • Interest-Free: The crucial question remains whether these loans were genuinely interest-free, whether TDR Capital and EG bondholders were privy to such arrangements, whether interest was later applied to these loans, and whether the debts were cleared following EG Group’s sale to Asda.
  • Consumer Impact: Mr. Jones has emphasized that these inquiries aim to assess if Asda is effectively positioned to mitigate rising living costs during the ongoing cost-of-living crisis.

Previous Committee Session

This latest letter follows a contentious committee hearing in July, during which Mr. Issa faced intense questioning regarding Asda’s fuel prices and employment practices. Accusations were made that Mr. Issa had not adequately responded to the committee’s inquiries during that session.

Concerns Over Asda’s Finances

Asda, the UK’s third-largest supermarket, was acquired by the Issa brothers in a £6.8 billion deal in 2021, backed by private equity firm TDR Capital. Subsequent developments, including the acquisition of EG Group, have saddled Asda with substantial debt, estimated at around £7.5 billion by Moody’s.

These mounting financial obligations have raised concerns that Asda may have limited capacity to invest in price reductions for customers as the cost-of-living crisis persists. The Issa brothers have been actively divesting assets over the past year to alleviate the debt burden incurred during their retail expansion.

Committee’s Perspective

Mr. Jones conveyed the committee’s apprehensions regarding the intricate corporate structure involving Asda and EG Group and the accompanying financial decisions, suggesting that these transactions might merely be channeling funds from Asda to repay the debts accrued in the initial acquisition of Asda.

Asda’s Response

In response, an Asda spokesperson reiterated the company’s commitment to cooperating fully with the Business and Trade Committee’s inquiry, promising to respond to follow-up questions. Asda’s owners have expressed their dedication to the sustainable growth of the business, with investments aimed at supporting both customers and colleagues during challenging times. Recently, Asda publicly pledged £36 million to reduce prices and introduced the “Kids Eat For £1” offer at its supermarket cafes.

The unfolding investigation raises pertinent questions about the financial intricacies of major corporate entities and their potential impact on consumer costs.

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