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Goldman Sachs, Barclays Arrange SUPERVALU Facility Amendment

May 23, 2016, 07:21 AM
Filed Under: Retail

SUPERVALU INC. announced it has successfully completed the amendment of its existing $1.5 billion senior secured term loan agreement. On July 28, 2015, the Company announced that it is exploring a potential separation of its Save-A-Lot segment, and that as part of that process it had begun preparations to allow for a possible spin-off of Save-A-Lot into a stand-alone, publicly traded company. This amendment permits the Company and its subsidiaries to undertake certain transactions reasonably determined by the Company to be necessary to effectuate a spin-off of Save-A-Lot.

In the event a spin-off of Save-A-Lot is consummated, the amendment requires that Save-A-Lot issue a minimum of $400 million of long-term debt and that SUPERVALU’s term loan balance be reduced by a minimum of $350 million (including with the net cash proceeds of the Save-A-Lot debt issuance). In addition, SUPERVALU would be required to retain at the time of a spin-off of Save-A-Lot a certain minimum equity stake in the spun-off, publicly traded Save-A-Lot company. In accordance with the terms of the amendment, the net cash proceeds from any future monetization of such retained equity stake could be required to be used to reduce the term loan balance.

“We are pleased to have been able to work with our term loan lenders to execute this amendment,” said Executive Vice President, Chief Operating Officer and Chief Financial Officer Bruce Besanko. “The Company now has the flexibility under its credit agreements to further explore the previously announced potential separation of Save-A-Lot into a stand-alone, publicly traded company.”

The amendment increases the interest rate margin above LIBOR from 3.50 percent to 4.50 percent (and up to 4.75 percent in the event of a downgrade of certain of the Company’s credit ratings), while the LIBOR floor remains at 1.00 percent. In addition, the amendment increases the Company’s flexibility to execute certain sale and leaseback transactions and acquisitions under the term loan agreement. The amendment also modifies certain covenants and other provisions set forth in the term loan agreement. The maturity date of the term loan remains March 21, 2019.

Goldman Sachs Bank USA and Barclays acted as joint lead book-runners and joint lead arrangers on the amendment.

SUPERVALU INC. is one of the largest grocery wholesalers and retailers in the U.S. with annual sales of approximately $18 billion. SUPERVALU serves customers across the United States through a network of 3,588 stores composed of 1,796 independent stores serviced primarily by the Company’s food distribution business; 1,360 Save-A-Lot stores, of which 897 are operated by licensee owners; and 200 traditional retail grocery stores (store counts as of February 27, 2016). Headquartered in Minnesota, SUPERVALU has approximately 40,000 employees.

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