Morrisons CFO resigns ahead of refinancing

0

Michael Gleeson resigned as chief financial officer at Wm Morrison a few months after the supermarket chain was taken over by private equity and before a major refinancing.

In a statement on Friday, Gleeson said it was “a good time for me to take on a new challenge.” Morrisons chief executive David Potts said he had “made a significant contribution to the business over the last eight years”.

Gleeson joined Morrisons in 2014 as group financial controller and held a number of other roles before becoming chief financial officer in 2020. Former chief financial officer Trevor Strain became chief operating officer in a largely management reshuffle interpreted as setting the stage for Potts’ eventual departure.

Potts then decided to stay, and the caliber of Morrisons’ management team was cited by US private equity group Clayton, Dubilier and Rice as a significant reason for his continuing with the company.

All three, along with former Morrisons chairman Andrew Higginson, previously worked at Tesco under Sir Terry Leahy, senior adviser to CD&R and now chairman of Morrisons.

CD&R beat stiff competition from a consortium led by Fortress Investment to seal the deal, which sparked a bonanza for senior executives.

Gleeson received around £2.5 million of shares he held directly and from the partial vesting of a performance-based incentive plan. He also received payments from future incentive plans that vested in a change of control, although the terms of those awards were not disclosed.

The £10bn cost of the Morrisons acquisition was funded by £3.4bn of equity and a £6.6bn package of bridge loans that will need to be refinanced.

Morrisons and CD&R considered starting a debt refinance immediately after the takeover ended, but the emergence of the Omicron variant of Covid-19 delayed the process until after Christmas.

Since then, Russia’s invasion of Ukraine has all but halted large-scale new issuance and depressed prices of existing debt. Bonds issued last year by rival Asda following its own takeover are now trading at around 10% discount to face value.

Morrisons is seen by credit analysts as a higher risk borrower than Asda because it will operate with more debt relative to its earnings.

A person with knowledge of the refinancing process said that while most new issues are on hold at the moment, the company aims to be ready to launch roadshows as soon as market conditions improve.

Although an official date for Gleeson’s departure has not yet been set, it is unlikely that he will attend these events now once the marketing process begins.

The person added that the delay was unlikely to result in the sale of other Morrison assets. During the bidding process, CD&R committed not to engage in “material” sale-leaseback transactions on the group’s store base, mainly in full ownership.

Share.

Comments are closed.