When the Issa brothers, Mohsin and Zuber, bought half of the U.K.’s supermarket chain Asda in 2021 from Walmart for £6.8 billion ($8.5 billion today), the deal was enormous for the retail industry.
The billionaire pair, whose joint net worth was estimated to be just over £5 billion ($6.3 billion) last year, have made a name for themselves in British retail. They own convenience stores and gas stations across the world through EG Group and have other retail holdings, including fast-food chain Leon.
More recently, EG Group has been battling mounting debt, which it’s been trying to tackle by selling parts of its business to Asda to create a full-blown retail empire.
But while the Issa brothers are pushing to become more powerful forces in the grocery business, they’ve also had debts to pay off elsewhere—on their two private jets.
The British moguls have been borrowing millions from EG Group to pay down debt on their jets, according to a report by the Financial Times Wednesday.
The group first lent the Issa brothers €39 million (about $42 million today) in an unsecured loan to buy the jets (they each have one) back in 2018. In 2022, EG Group gave them an additional $7 million to pay down debt on the Bombardier Global 6000 jet and a smaller Bombardier Challenger 350, the outlet reported, citing corporate filings.
The loans were given to Clear Sky companies, which are registered in the Isle of Man and are owned by the two brothers.
A representative at EG Group told Fortune in a statement that the loans have always been disclosed by the company.
“These loans have been provided at rates comparable to the average commercial rate of interest. The interest has been identified and recognised within EG Group’s finance income,” the representative said.
Reports about the private jet-related debts come as the EG Group navigates ways to lower its own debt burden, much of which is due in 2028 (extended from 2025). To be sure, the special loan arrangement, first reported by the FT in October 2022, involves secured borrowings from the Bank of America to fund the private jets’ purchases in addition to EG Group’s unsecured loan from a few years ago. Earlier this month, media reports suggested Zuber Issa was considering offloading his share in the Asda deal to refocus on the petrol station and convenience store business instead.
In the eye of the storm
Asda, which the Issa brothers co-own along with London-based private equity firm TDR Capital, has been facing scrutiny over accusations that it’s unfairly inflating food and gas prices amid a persistant cost-of-living crisis in Britain. Members of Parliament, part of a business committee, even raised questions last year over whether Asda’s troubled finances were a reason the grocer wasn’t doing more to fight price inflation.
Meanwhile, in the EG Group’s third quarter earnings release in November, the brothers said they had made “significant progress” in their deleveraging strategy, with the aim of putting in place a long-term capital structure.
“We continued to deliver upon our key strategic priorities in Q3, including growing gross profit in our foodservice, and grocery and merchandise businesses,” the Issa brothers said in a statement.
Representatives at Asda didn’t immediately return Fortune’s request for comment.
Editor’s Note: The loan maturity date has been edited to reflect its extension from 2025 to 2028.
