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Wm Morrisons banks continue to offload debt from LBO

Feb 15, 2023
A shopper walks past a branch of Morrison supermarket in north London

Photo: Dinendra Haria/SOPA Images/LightRocket via Getty Images

A group of investors, including Apollo Global Management, has scooped up about €500 million of steeply discounted debt from the acquisition of the British grocer Wm Morrison Supermarkets, Bloomberg reported and Axios confirmed.

Why it matters: The slow pace of the banks offloading the nearly £6.6 billion in debt signals it is weighing on banks’ balance sheet.

What’s happening: The debt was sold at 85 cents on the euro, Bloomberg reports, citing sources familiar.

  • In July, Pacific Investment Management Co., or PIMCO, bought a large part of €800 million of loans from the banks at 87.25 cents on the euro.

Details: BNP Paribas led the sale process, per Bloomberg.Flashback: Clayton, Dubilier & Rice took the British grocery chain private in 2021 through a nearly £10 billion LBO.

What’s next: Expect more unwinding. After this sale, banks will still hold about £1.3 billion in debt from the original package, and a £1 billion revolving credit facility.

The bottom line: Offloading debt at a steep discount is a sign that debt markets remain challenging — especially for deals put together before the market downturn.

Apollo and BNP Paribas declined to comment.

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