SuperValu firms spread on $1.5 billion term loan at Libor plus 500 bps

By Sara Rosenberg

New York, Feb. 13 - SuperValu Inc. set pricing on its $1.5 billion covenant-light term loan (B1) due March 2019 at Libor plus 500 basis points, the low end of revised talk of Libor plus 500 bps to 525 bps and tight of initial talk of Libor plus 575 bps, according to a market source.

The term loan still has a 1.25% Libor floor and 101 soft call protection for one year and was sold at an original issue discount of 99.

The discount had tightened from 98½ earlier in the syndication process.

Amortization on the term loan is 1% per annum.

Security for the term loan is a portion of the company's real estate and an equity pledge of Moran Foods LLC.

The company's $2.4 billion credit facility also provides for a $900 million asset-based revolver due March 2018 that has opening pricing of Libor plus 200 bps with a 37.5 bps unused fee.

Pricing on the revolver is grid-based and can range from Libor plus 175 bps to 225 bps, and the unused fee can range from 25 bps to 37.5 bps.

Closing on the credit facility is expected during the week of March 18.

Wells Fargo Securities LLC, U.S. Bank, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc., Barclays and BofA Merrill Lynch are the lead arrangers on the revolver, and Goldman Sachs, Credit Suisse, Morgan Stanley, Bank of America and Barclays are the lead arrangers on the term loan.

Proceeds from the credit facility will be used to refinance a $1.65 billion asset-based revolver, an $846 million term loan and $490 million of 7½% bonds scheduled to mature in November 2014.

The new deal is being done in connection with the sale of SuperValu's Albertsons, Acme, Jewel-Osco, Shaw's and Star Market stores to Albertson's LLC, a portfolio company of Cerberus Capital Management LP, for $100 million in cash and the assumption of about $3.2 billion in debt and the tender by a Cerberus-led investor consortium for up to 30% of SuperValu's outstanding common stock at a purchase price of $4 per share in cash.

Secured debt is 2.7 times, total debt is 4.1 times, and net debt is 3.9 times.

SuperValu is an Eden Prairie, Minn.-based food wholesaler.

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