EG Group in $1.5bn sale and leaseback to pay debt

Blackburn-based petrol station, restaurant and convenience store giant EG Group announced it has agreed to the sale and leaseback on a portfolio of its sites on the east coast of the United States to Realty Income Corporation for a gross consideration of $1.5 billion.

EG said it will use net proceeds to repay debt.

This portfolio – which EG America will continue to operate and trade – comprises 415 store assets under the Cumberland Farms, Fastrac, Tom Thumb and Sprint banners.

EG Group received a high degree of interest from multiple blue-chip investors and attractive terms for the transaction.

The transaction is expected to close in the second quarter of 2023, subject to customary closing conditions.

“The assets represents just c.15% of the group’s total freehold property in 10 markets, reflecting how its estate continues to be underpinned by strong asset backing globally,” said EG Group.

“Following completion, EG will pay an initial rent of $103m per annum with respect to these assets.

“Further information will be provided to investors in EG Group’s Q4 and full-year 2022 trading update call on Thursday 9 March, 2023.

“This transaction is in line with management’s commitment to reduce total net leverage through debt reduction and free cash flow generation, as communicated in EG Group’s Q3 trading update in November 2022.”

EG Group co-CEO Zuber Issa said: “Today’s announcement demonstrates the progress we continue to make to put in place a robust capital structure for the medium term that will underpin our long-term strategy and represents an important first step in this process.”

New York Stock Exchange-listed Realty Income is an S&P 500 company structured as a real estate investment trust.

EG was advised by Eastdil Secured, the global real estate investment bank, alongside Barclays, Latham & Watkins, Skadden, Arps, Slate and Meagher & Flom, Rothschild & Co, and EY.

EG Group currently employs more than 50,000 staff at 6,600 sites across the UK, Ireland, Europe, US and Australia. Its founders and co-CEOs are Zuber Issa and Mohsin Issa.