SuperValu Announces Flexibility to Explore Save-A-Lot Spinoff Post Amendment to $1.5B Loan Agreement
MINNEAPOLIS, MN - SuperValu has reportedly finished the amendment process for its $1.5 billion senior secured term loan agreement, possibly bringing it closer to the anticipated spin-off of its Save-A-Lot chain.
“We are pleased to have been able to work with our term loan lenders to execute this amendment,” Executive Vice President, Chief Operating Officer, and Chief Financial Officer Bruce Besanko said in a press release. “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.”
What the next step might be for the chain has been a subject of speculation since the company announced that it was exploring a potential separation of its Save-A-Lot segment last July, with rumors of either a sale or spin-off.
It is one of several avenues SuperValu looks to be exploring as it continues to make moves, with reports earlier this month of the possibility of the chain selling its Lucky’s Market banner to Kroger.
In the event of a spin-off, the retailer stated that 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).
The loan’s maturity date is still March 21, 2019, with the interest rate margin having been increased above LIBOR from 3.50 percent to 4.50 percent, with the LIBOR floor remaining at 1.00 percent.
Additional details included:
- Increases in the SuperValu’s flexibility to execute certain sale and leaseback transactions, and acquisitions, under the term loan agreement
- Modification of certain covenants and other provisions in the term loan agreement
- The net cash proceeds from any future monetization of retained equity stake in the spin-off during a certain minimum time period could be required to be used to reduce the term loan balance
The retailer did not provide any information on a more solidified timeline of when, or if, it would pursue the spin-off. Keep checking in with AndNowUKnow as we continue to follow further developments in this and other moves in the retail market.
