SuperValu bonds jump on sale of assets to Cerberus-led group; company also swings to Q3 profit

By Paul Deckelman

New York, Jan. 10 - Bonds of SuperValu Inc. were ringing up solid gains in busy trading Thursday morning as investors reacted to the news that the underperforming supermarket operator had agreed to sell some of its best-known banners, or store chains, in exchange for a modest cash payment and the shedding of a sizable portion of the company's debt.

SuperValu's most widely traded issue, its 8% notes due 2016, had jumped to 101 bid at mid-morning from Wednesday's close at 971/4, on round-lot volume of more than $14 million.

The company's 7½% notes due 2014 had pushed up to par bid from 98 7/8 at the close Wednesday, with over $6 million of those bonds changing hands.

The company's New York Stock Exchange-traded shares zoomed by 42 cents, or 13.82%, to $3.46 at mid-morning. Volume of 19.4 million shares was more than triple the norm.

Eden Prairie, Minn.-based SuperValu agreed to sell five of its well-known chains - Albertsons, Acme, Jewel-Osco, Shaw's and Star Market - a total of 877 stores out of its more than 2,300 nationwide outlets, plus the related Osco and Sav-on in-store pharmacies - to a consortium led by private equity giant Cerberus Capital Management LP.

The syndicate also includes Kimco Realty Corp., Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group.

The buyers will pay SuperValu $100 million in cash - but will also assume $3.2 billion of the company's roughly $6.3 billion of total debt lease obligations.

As part of the deal, a Cerberus-led group will also launch a tender offer for up to 30% of SuperValu's common stock at $4.00 per share - a 50% premium to the 30-day average closing share price.

SuperValu also reported that it swung to a profit of $16 million, or 8 cents per share, for the fiscal third quarter ended Dec. 1, versus its year-earlier loss of $750 million, or $3.54 per share.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.