EY took on $700m in extra loans for now failed Project Everest

A slowing economy is hitting the Big Four firms. File picture: Sasko Lazarov / RollingNews.ie

EY took on about $700m (€650m) in extra borrowing to deal with costs related to its failed plan to spin off its consulting unit.

Current loans at EYGS, the entity that provides services to the network’s member firms, more than tripled from a year earlier to $983m as of June 30, 2023, according to accounts filed with the UK’s Companies House. The firm expanded an existing credit facility and also entered into a new one during the period.

The extra debt will help spread the costs incurred by the firm’s examination of a split of its accounting and consulting arms. Codenamed Project Everest, it collapsed in April after partners squabbled over key issues like how to divide the tax practice.

EY recently tapped Janet Truncale to take over as its next chief executive after the scrapping of its intended break-up. She will succeed Carmine Di Sibio, who designed the Everest plan, at a time when a slowing economy is hitting the Big Four firms.

“It is common for a $50bn global organisation such as EY to maintain a modest financing facility on our balance sheet,” the company said in a statement. 

“The costs incurred during Project Everest will be almost entirely paid down by July 1, 2024. There is no change to this position.” 

EY’s global operating business earned $6.4bn in fees from national member firms in 2023, up 20% from the previous year. At the same time, its operating expenses rose to $6.3bn, up from $5.3bn in 2022.

The borrowing was first reported by the Financial Times.

• Bloomberg