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Billionaire Issa brothers sell off KFC restaurants to reduce debt pile

KFC
KFC

The billionaire Issa brothers that own Asda have agreed to sell more than 200 KFC restaurants as part of efforts to pay down their huge debt pile.

EG Group said it will sell all its 218 KFC franchises in the UK and Ireland to the fast-food chain’s Kentucky-based parent company Yum Brands.

Proceeds of the sale, which is expected to complete in the first half of 2024, will be used to repay debt.

Blackburn brothers Zuber and Mohsin Issa have been trying to ease the pressure on EG Group, which operates thousands of petrol stations worldwide.

The company had built up a debt pile of $9.6bn (£7.6bn) at the end of last year, but surging interest rates have driven up the cost of servicing this debt.

Last month, the company said it had made “significant progress” in paying down its debts, which are understood to have been reduced to $5.7bn after EG Group sold its UK assets to sister company Asda for $2.5bn.

In a statement today, the Issa brothers said the sale of the KFC sites was the “latest transaction in our significant deleveraging this year to put in place a sustainable capital structure for the group”.

They added: “We continue to make good progress against our key strategic priorities – delivering a world-class grocery and merchandise, foodservice and fuel proposition across nine markets globally.”

Yum, which also operates the Pizza Hut and Taco Bell franchises, said the deal will allow it to accelerate KFC’s growth in the UK and Ireland.

The fried chicken chain has posted a 5pc increase in like-for-like sales across its 1,040 restaurants this year and plans to open a further 500 sites by the end of the decade.

The sale will see all of EG Group’s privately-owned KFC franchises, over half of which are drive-thrus, and 7,800 employees come under KFC UK and Ireland management.

EG Group said it will continue to operate its Cooplands bakery business around the globe, as well as other franchises including Starbucks, Subway and Greggs.

While EG Group has begun to pay down its debt pile, the Issa brothers are still grappling with financial pressures at Asda.

The deal to sell EG’s UK business to Asda loaded the supermarket chain with an extra £684m of debts, taking its total debt pile to around £4.6bn.