Bank of China contributes to GBP 840 million syndicated term loan to Asda to fund the Issa brothers' acquisition and TDR Capital's acquisition

Project narrative

Between February 3 and 16, 2021, Bank of China (BOC) contributed an estimated GBP 70 million to a GBP 840 million syndicated term loan to Asda -- formerly Walmart's wholly-owned British subsidiary -- to fund the Issa brothers' acquisition and TDR Capital's acquisition of the company. The loan had a maturity of five years and a final yield between 2.78% and 2.89%. Negotiations between Asda and the lending syndicate began on February 3, 2021. Asda originally offered a yield of 3.4%, but tightened the pricing on February 5, 2021 to a yield of 3.15%, and again on February 9, 2021 to the final yield of 2.78%-2.89% due to high demand among lenders. The total cost of the acquisition was GBP 6.8 billion. In addition to the term loan, the Issa brothers, who own EG Group, and TDR Capital issued, through Asda, GBP 3.7 billion of junk rated bonds and loans and a GBP 190 million revolving credit facility, indebting the company. The buyers also sold off Asda assets worth an accumulative GBP 950 million. The buyers paid an estimated GBP 165 million to advising groups. The acquisition was completed on February 16, 2021. Walmart retained a minority stake, a seat on the board, and a guaranteed commercial relationship with Asda. Twelve (12) known institutions participated in the lending syndicate. Barclays acted as mandated lead arranger (MLA), underwriter, and syndication agent. Deutsche Bank and Morgan Stanley acted as physical bookrunners. BofA Securities, Lloyds Bank, Rabobank, and HSBC acted as mandated lead arrangers (MLAs) and bookrunners. Bank of China (BOC), Intesa Sanpaolo, Commerzbank, National Westminster bank (NatWest), and Sumitomo Mitsui Banking Corporation (SMBC) acted as mandated lead arrangers (MLAs). Rishi Sunak, Prime Minister of the United Kingdom at the time, praised the deal for bringing Asda back under the control of a British corporation. However, EG Group has since come under scrutiny due to concerns over the opaque nature of its governance and internal controls. Deloitte, a consultancy, resigned as auditor due to transparency issues in 2020.