A Labour donor will receive more than £100m after his car glass repair company controversially loaded up on debt to pay a multibillion-pound dividend.
Gary Lubner, a South African businessman who helped bankroll Labour’s election victory, is a significant shareholder in Autoglass, which is making a one-off payout through its parent company Belron.
Luxembourg-based Belron will reward Mr Lubner and four private equity shareholders a total of €4.3bn (£3.6bn) in a one-off dividend funded by billions of euros in new debt. The company’s approach to debt has been labelled “aggressive” by one credit ratings agency as a result of the move.
Mr Lubner, who was chief executive of Autoglass owner Belron between 2000 and 2023, will get €140m (£125m) of the dividend. Mr Lubner was replaced by Carlos Brito, the former chief executive of AB InBev.
To fund the payout, Belron is being loaded with nearly €9bn of new debt which has led rating agencies to cut its debt rating to “junk” status.
Borrowing money to pay shareholders, known in financial circles as a “dividend recap”, is controversial because it puts more financial stress on companies while enriching owners.
The 65-year old stepped down in 2023 having led Belron for two decades. He still owns a 3.3pc minority stake in Belron through his investment vehicle Atessa.
The publicity-shy businessman came to prominence earlier this year after he donated £4.5m to Labour, making him the Party’s biggest donor for decades.
The electoral register shows he has donated more than £8m to the party since 2022.
He said he backed Labour after being impressed by Rachel Reeves’ down-to-earth manner in a meeting in 2021, when the party was in opposition. “She was possibly the next chancellor, but she was booking her own train tickets,” he said.
He is a notable supporter of liberal charities and has pledged to give away the vast majority of his wealth, saying last year “I don’t think it’s the right thing to pass on that amount of wealth” to his three children.
A source close to Mr Lubner said he was unlikely to use his payout for political purposes, and the money would go towards the 65-year old’s charitable causes.
Belron was led by the Lubner family for decades, having previously been established by a company set up by Mr Lubner’s grandfather, Morris Lubner, in South Africa in the early twentieth century. His father, Ronnie Lubner, expanded it into the UK and was chairman for many years.
D’Ieteren Group, a Belgian conglomerate, bought the majority of the company in 1999 and today own 50.1pc.
Under the terms of the pay out, D’Ieteren will receive €2.2bn and the minority owners, which include, BlackRock, GIC and Morrisons owner CD&R, will share the bulk of the remainder.
Ratings agency S&P last week cut Belron’s debt to junk status owing to the debt-fuelled payout, moving it down a notch from BBB- to BB-.
“The notable increase in leverage led us to revise our assessment of Belron’s financial risk profile to aggressive from significant,” S&P said.
The reason for the dividend payout is because of a change in the ownership structure at Belron’s majority owner D’Ieteren.
The business, which is listed on the Brussels stock market, is rejigging its family ownership structure and needs the dividend to pay shareholders.
Nicolas D’Ieteren, Belron’s chairman, is buying out a 16.7pc stake owned by his cousin, Olivier Périer, as the family seek to consolidate their ownership into one branch of the dynasty.
D’Ieteren will use the €2.2bn dividend from Belron to pay a one-off €74 per share special dividend to its own shareholders, which include fund managers and large pension funds.
It said the payout was required to reward shareholders for their “continued support”.
Mr Lubner declined to comment. Belron declined to comment.
2024-10-01T14:36:14Z dg43tfdfdgfd