Private-equity owned supermarket Morrisons is aiming to spend £1 billion buying back its debt, after a big windfall from the sale of its petrol forecouts.
The supermarket, owned by US firm Clayton, Dubilier & Rice, had net debts of £8.5bn at the end of October last year, according to its most recent financial report. The debt pile has more than doubled since CD&R bought the business in 2021, and rising interest rates since that deal closed have made debt more costly. Morrisons spent £735 million financing its debts last year.
The business has set out a course to make its debt pile more manageable. Earlier in the year, it it sold its 337 petrol forecourts to Motor Fuel Group - also owned by CD&R - for £1.8 billion.
That influx of cash helped Morrisons to today set out plans to spend up to £1 billion buying back its debt.
Morrisons is inviting holders of its term loans due in 2026, 2027, 2028, 2029 and 2031 to sell back the supermarket’s debts via a Dutch auction. The tender offers are expected to settle on 6 June.
At the same time as its debt struggles, Morrisons’ market share has slid as discounters Lidl and Aldi gain ground. Market research firm Kantar puts Morrisons fifth in the UK grocery market, behind Aldi.
Parliament’s Business and Trade Committee has been critical of the amount of debt owed by some major supermarkets. Rival Asda has also struggled with debt after a takeover, and refinanced a number of its loans earlier this month in order to make its debt pile more manageable.
