Spartan Stores plans $1 billion credit facility for Nash Finch merger

By Sara Rosenberg

New York, July 22 - Spartan Stores received a commitment for a $1 billion five-year senior secured credit facility in connection with its merger with Nash Finch Co., according to a 425 filing with the Securities and Exchange Commission on Monday.

Wells Fargo Bank and BofA Merrill Lynch are the joint lead arrangers and bookrunners on the deal.

The facility consists of a $900 million revolver, a $40 million first-in last-out revolver and a $60 million term loan.

Pricing on the revolver is expected to range from Libor plus 150 basis points to 200 bps and pricing on the first-in last-out revolver is expected to range from Libor plus 275 bps to 325 bps, both based on monthly average excess availability. Pricing on the term loan is expected to be Libor 550 bps.

Covenants include minimum excess availability equal to the greater of 10% of the total borrowing base and $80 million.

Proceeds will be used to refinance credit facilities at Spartan and Nash Finch and for working capital and general corporate purpose.

Under the agreement, Spartan and Nash Finch are merging in an all-stock transaction valued at about $1.3 billion, including existing net debt at each company. Nash Finch shareholders will receive a fixed ratio of 1.2 shares of Spartan common stock for each share of Nash Finch common stock they own.

At closing, Spartan shareholders will own around 57.7% of the equity of the combined company and Nash Finch shareholders will own about 42.3%.

Closing is expected by the end of the year, subject to customary regulatory approvals and conditions, including the approval of Spartan Stores and Nash Finch shareholders.

Spartan is a Grand Rapids, Mich.-based grocery distributor. Nash Finch is an Edina, Minn.-based food distributor serving military commissaries and exchanges.

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