Alliance Boots buys back £400m of distressed debt

Alliance Boots, the retailer that was taken private by executive chairman Stefano Pessina and KKR almost two years ago, has reportedly bought back more than £400m of the debt used to acquire the business.

It has been reported that the group is buying back debt from distressed sellers at less than 70p in the pound.

According to the company's finance director George Fairweather, Boots bought back £191m of debt in the year ending March 31, gaining £106m. It also had net debt of £9bn. Since then, the company has bought another £227m of debt for £142m in cash.

The buy-backs, which have been funded by Alliance Boots' holding company, coincide with at least 100 senior managers at the business taking no salary increase to improve the pay of shop workers. The retailer is also deciding whether to close its final salary pension scheme to existing employees as well as cut 1,500 jobs in its pharmaceutical wholesale division.

The company's EBITDA rose 11.3% last year to £1.25bn, while sales rose 15.5% to £20.5bn.

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