Kroger gets $4.75 billion term loan commitment for Albertsons purchase

By Wendy Van Sickle

Columbus, Ohio, Nov. 10 – Kroger Co. executed a term loan agreement on Nov. 9 under which the lenders committed to funding $4.75 billion of senior unsecured term loans in two parts, according to an 8-K filed with the Securities and Exchange Commission.

The loans are contingent on the completion of the company’s acquisition of Albertsons Cos. Inc. and would be used to pay a portion of the consideration and related costs. A $3 billion tranche would mature on the third anniversary of the closing date, and a $1.75 billion tranche would mature on the 18-month anniversary.

Entry into the credit agreement reduces the availability under the company’s 364-day $17.4 billion senior unsecured bridge term loan credit facility entered into on Oct. 13 by $4.75 billion.

Citibank, NA is the administrative agent and a joint bookrunner and lead arranger along with Wells Fargo Securities LLC, Mizuho Bank, Ltd., Truist Securities, Inc. and U.S. Bank NA.

Wells Fargo Bank, NA, Mizuho, Trust Bank and U.S. Bank are the co-syndication agents.

JPMorgan Chase Bank, NA, MUFG Bank, Ltd., PNC Bank, NA, Royal Bank of Canada and Huntington National Bank are co-documentation agents.

Borrowings will bear interest at term SOFR plus a margin ranging from 87.5 basis points to 137.5 bps, depending on Kroger’s debt rating.

There is a financial covenant pertaining to the company’s leverage ratio.

Also on Nov. 9, Kroger amended its amended and restated credit agreement dated July 6, 2021 with Bank of America, NA and Wells Fargo Bank, NA as co-administrative agents to use term SOFR as the benchmark rate and to change the maximum leverage ratio permitted for periods ending after closing of the acquisition.

Kroger is a Cincinnati-based grocery retailer. Albertsons is a Boise, Idaho-based food and drug retailer.

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