 - akin to a corporate overdraft. Black says one of the main questions Morrisons and CD&R need to answer is whether 'CD&R have to inject more capital in order to secure long-term debt funding'. If they decide against this, one option could be for CD&R to sell off assets such as freehold supermarkets. The problem with this is that adding rent costs will put more pressure on already wafer-thin profit margins. A third option is more drastic. Morrisons' owners could toss the supermarket on the 'too difficult to deal with' pile, and try to sell the business. Amazon, with whom Morrisons has a long-standing business relationship, is the obvious buyer among many industry watchers. Not everyone agrees, however. 'They've been sniffing each others' a**** for about five years,' says one senior industry figure. 'You'd have thought by now whether they like each others' scent.' Those close to Morrisons' owners insist there is no sense of panic, and insist that CD&R has not yet received bid interest from Amazon. Furthermore, they are sceptical about the Kantar figures, which insiders at both the company and its owners insist are not entirely accurate. Their relaxed approach towards them, however, comes by virtue of the business being away from the glare of the public markets. And although the debt pile is a problem, this is predominantly an issue for the banks. The 19 lenders who have been left holding the remaining £2bn of acquisition loans will have to sell it to third parties at a steep discount. That will adversely impact their finances, not those of the company. 'We have plenty of flexibility in the documentation,' says one source. All the debt need not be repaid for at least seven years and the RCF is c){kind=link}
US retail giant seen as the obvious buyer for Morrisons, but private equity owners are exploring less drastic options
Even Morrisons’ most ardent supporters concede that the supermarket has been operating “with the wind in its face for a bit”.
Once Britain’s fourth biggest supermarket, it is now the country’s fifth largest.
Having been overtaken by Aldi, Morrisons is now nervously looking over its shoulder at another German discounter, sixth-place Lidl.
Figures released yesterday reveal Morrisons had 9pc of the grocery market compared with 10pc a year ago. Morrisons sales have fallen 4.6pc, with only two brands experiencing a year-on-year sales contraction – the other one is Waitrose, falling 1.9pc – in the 12 weeks to October 30, according to Kantar.