Asda owner shrugs off £4bn debt mountain and insists he should stay in charge

Asda’s co-owner has insisted he is the best person to run the debt-laden grocer as an 18-month hunt for a chief executive drags on.

Mohsin Issa led a highly leveraged takeover in 2021, backed by his brother Zuber and private equity group TDR Capital that saddled Asda with huge loans just before interest rates sky-rocketed.

He was called back before MPs yesterday after an unconvincing performance at a previous hearing when he failed to answer basic financial questions about the business, which has debts of £4.2billion, excluding rent.

Issa told the Business and Trade Select Committee that he and his brother were committed to Asda ‘for the long haul’ despite recent reports they had fallen out over ‘a family matter’.

He also denied a claim by Conservative MP Mark Pawsey that the Asda deal was ‘a massive leap’ for the brothers, who built the EG Group into a leading petrol stations operator, or that he lacked the ‘skills and background’ to run the Leeds-based food retailer.

Mohsin Issa led a highly leveraged takeover in 2021, backed by his brother Zuber and private equity group TDR Capital that saddled Asda with huge loans 

‘I’m actually best qualified to take this job,’ said Issa, who is overseeing the ‘significant project’ of separating Asda’s computer systems from previous owner Walmart.

‘The search for the chief executive continues,’ he added. ‘As and when we find a suitable candidate I will absolutely hand it over.’

MPs also quizzed Issa on Asda’s ‘complex’ and ‘opaque’ financial set-up.

Labour’s Charlotte Nichols asked if it was ‘sensible from a PR point of view’ to have a corporate structure which included four offshore units in Jersey called ‘Phantom’. 

She cited the dictionary definition of the word as not real, illusory, a figment of the imagination, deception, a lie, a thing that merely resembles another thing’.

Issa insisted MPs could have confidence Asda was being run properly. He also denied Jersey was being used to avoid paying corporation tax.

‘All of these companies are UK tax-registered,’ he said. ‘They pay full UK tax.’

Asda has been losing market share to the German-owned discounters Aldi and Lidl since the Issas took over amid concerns that the cost of servicing its debts was hampering investment. 

But Issa told MPs that Asda’s 150,000 staff had been given two pay rises in the last two years, worth £265million, while another £60million had been paid to logistics workers and £140million spent on keeping prices lower for shoppers.

Chief financial officer Michael Gleeson also revealed that £700million of Asda’s debt pile will be refinanced in February, costing an extra £30million a year in interest payments.

This post first appeared on Dailymail.co.uk