The billionaire brothers seeking to buy Asda have been dealt a fresh blow after credit agency Moody's cut its rating on the debts of their petrol station empire further into junk territory.
Zuber and Mohsin Issa's company EG Group was criticised by Moody's for failing to improve its financial reporting and management processes following a two-year acquisition spree.
A spokesman for the brothers said they strongly disagree with the decision.
The Blackburn-based entrepreneurs, who are buying Asda in a £6.7bn deal with private equity firm TDR, have more than 6,000 petrol stations in 10 countries.
They have expanded their forecourt business at breakneck speed and racked up £7.2bn of debt along the way to support takeovers across the world including hundreds of sites in Australia and the US.
Moody’s highlighted concerns around internal controls and the make-up of EG Group's board, which led to the company's auditor Deloitte resigning. KPMG has since taken over as auditor.
The pair are seeking to appoint a chairman and independent directors. EG Group has not had a chairman since Tony DeNunzio stepped down just months after joining in 2016.
Rival ratings agency S&P is more bullish and has maintained its rating and outlook, saying EG Group’s positive performance for the year to date gave it breathing room to tackle debt, although it added that the leverage remains high.
A spokesman for EG Group said it “strongly disagrees with Moody’s decision” and argued the downgrade did not reflect the investment the Issa brothers have already made to strengthen the business in the last 12 months.
The Issas will provide investors with a further update in November having hosted another meeting with debt investors this month.
EG Group said it expects record underlying profits of $478m (£369m) for the three months to September 30, up 54pc compared with the same period last year.