Wm Morrisons banks continue to offload debt from LBO
- Kimberly Chin, author of Axios Pro: Retail Deals
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.
- The deal was struck during the heydays of 2021's bull market, with deal caps set at tight levels and heavy financial adjustments.
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.