SuperValu to draw on credit facility for Unified Grocers acquisition

By Devika Patel

Knoxville, Tenn., April 11 – SuperValu Inc. said it plans to use borrowings from its credit facility to help fund the acquisition of Unified Grocers, Inc. in a transaction valued at $375 million.

The deal will cost SuperValu about $114 million in cash for all of Unified Grocers’ outstanding stock, plus the assumption and pay-off of Unified Grocers’ net debt of about $261 million at closing.

“We intend to finance the transaction through a combination of surplus cash and borrowings under our credit agreements,” executive vice president, chief financial officer, and chief operating officer Bruce Besanko said on the company’s conference call announcing the deal on Tuesday.

“We’ll essentially pay off Unified’s debt, which is comprised mainly of an asset-backed facility together with a term loan.

“We’ll pay those off and then use our cash and credit facilities to fund it,” Besanko said.

The company’s top executive weighed in, saying that the cash to be used in the transaction was raised through the sale of Save-A-Lot and generated from operations and the debt incurred will be obtained under SuperValu’s credit facility.

“We plan to use approximately $175 million of surplus cash we’ve retained from the sale of Save-A-Lot and generated from operations,” president and chief executive officer Mark Gross

“The balance of the cash requirement, including various separation costs and customary deal fees, will be financed through borrowings under our credit facility,” Gross said.

SuperValu is an Eden Prairie, Minn.-based supermarket operator and wholesale grocery distributor.

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