Morrisons has kicked off the process to reduce its debt load, following the £2.5bn sale of its petrol forecourts to Motor Fuel Group (MFG) last month.
The deal gave the supermarket chain a 20% minority stake in MFG and established commercial and supply agreements with the fuel group.
At the time, Morrisons said it intended to use the cash proceeds of £1.8bn to strengthen its structure and help to repay some of its mounting debt pile.
To reduce its debt, it has now started a process involving multiple tender offers to a number of debt investors. They have allocated up to £1bn for this, all funded from cash reserves.
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It comes as Morrisons fell to a £1bn loss last year as debt interest payments related to its private equity takeover soared.
Back in October 2021, private equity firm Clayton Dubilier & Rice (CD&R) won an auction to buy Morrisons in a deal valued at £7bn, and the grocer’s most recent financial report showed it had £8.5bn in debt at the end of October last year.
Morrisons parent company Market Topco’s accounts revealed that the group posted a pre-tax loss of £1.1bn last year, having accumulated £735m in interest costs which were tied to external debt and inter-company loans.
The debt-financing bill was 23% higher than the £593m incurred in 2022.
The process comes as Morrisons is being sued by a subsidiary of French giant Bouygues, over its £2.5bn deal to sell its petrol forecourts.
In the wake of the sale, the supermarket abandoned a EV charging agreement it had signed in 2019 with Equans EV Solutions, which is owned by the French conglomerate, which gave it exclusive rights to install chargers at 273 of its forecourts.
The firm is now seeking to block the £2.5bn forecourts disposal as it sues the retailer for alleged breach of contract.
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