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SuperValu amends term loan to permit spinoff, increases pricing
By Marisa Wong
Morgantown, W.Va., May 23 – SuperValu Inc. amended its existing $1.5 billion senior secured term loan agreement in order to undertake some transactions necessary to spin off its Save-A-Lot segment, according to a Monday press release.
In July 2015 the company had announced a potential separation of its Save-A-Lot segment and had begun preparing for the proposed spinoff.
If the spinoff is completed, the term loan 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.
In addition, SuperValu would be required to retain at the time of the spinoff a specified minimum equity stake in the spun-off Save-A-Lot company. Under the terms of the amendment, the cash proceeds from any future monetization of such retained equity stake could be required to be used to reduce the term loan balance.
The amendment increases the interest rate to Libor plus 450 basis points from Libor plus 350 bps. The margin is subject to a 25 bps step-up if the company’s credit ratings are downgraded. The Libor floor remains at 1%.
The amendment also increases the company’s flexibility to execute sale and leaseback transactions and acquisitions under the term loan agreement.
The amendment modifies some covenants and other provisions as well.
The maturity date of the term loan remains March 21, 2019.
The company paid the lenders a 25 bps amendment fee, according to an 8-K filing with the Securities and Exchange Commission.
Goldman Sachs Bank USA and Barclays acted as joint lead bookrunners and joint lead arrangers on the amendment.
SuperValu is an Eden Prairie, Minn.-based supermarket operator and wholesale grocery distributor.
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