Asda has successfully secured a £155 million loan to postpone its debt repayment deadlines, easing its financial constraints.
Asda, the British supermarket chain, has obtained a private loan amounting to £155 million. This strategic move aims to defer repayment deadlines for its immediate debts. The funds will be integrated into Asda’s existing Euro loan and utilised in tandem with equivalent cash from the company’s balance sheet. This financial manoeuvre is intended to address outstanding financial commitments due in 2025 and 2026, thereby alleviating some of the financial pressure the retailer faces.
Credit rating agency Fitch had previously highlighted the risk of an approaching repayment to former owner Walmart, scheduled by 2028, which could have forced Asda to refinance. However, this new development reduces that risk, offering Asda greater financial flexibility.
Asda’s current debt stands at approximately £6 billion, with significant refinancing efforts having taken place in May when over £3.2 billion of debt was refinanced. Therefore, this latest move aligns with Asda’s broader strategy to manage its financial obligations effectively.
A spokesperson for Asda commented on the company’s financial health, stating that Asda remains a robust cash-generative business with a strong and stable capital structure. These factors enable the supermarket to invest in employee development and new customer offerings while successfully decreasing its leverage ratio from 4.1 to 3.0 over the past 18 months.
At the end of the third quarter of 2024, Asda’s net debt was reported to be £3.8 billion, marking a £100 million reduction from the previous quarter. This demonstrates Asda’s commitment to reducing its debt load and improving its financial standing.
In an effort to revitalise its business amid declining sales, Asda recently appointed former CEO Allan Leighton as its executive chairman, replacing Lord Stuart Rose. This leadership change is seen as part of Asda’s wider efforts to enhance its performance and stabilise its market position.
By securing a £155 million loan, Asda aims to improve its financial situation, providing more leeway in its debt management and setting the stage for future growth.
