New Selfridges owners take on extra debt
What: The new owners of Selfridges have added over GBP 1.7 billion of debt to the firm’s balance sheet.
Why it is important: The higher risk strategy the new owners are taking could boost investment returns significantly.
A loan of GBP 1.7 billion was provided to the new owners against the freehold of the historic Selfridges London flagship.
The Thai and Austrian owners paid GBP 4 billion for the group and the loan was reportedly used to release capital for the acquisition, but wasn’t equivalent to the payment of a dividend to the new owners.
While using debt to buy a business is a common strategy, the Selfridges owners have rejected this notion as their amount of debt is much lower and the luxury focus of their business insulates them from the current problems occurring in the UK retail industry.
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