Albertson’s downsizes bonds to $1.25 billion, sets talk in 7 7/8% area; pricing Wednesday

By Paul A. Harris

Portland, Ore., Oct. 7 – Albertson’s Holdings LLC further downsized its offering of eight-year second-lien senior secured notes (B2/CCC+) to $1,245,000,000 from $1,375,000,000, after having previously downsized it from $1,625,000,000, according to market sources.

Some of the proceeds were shifted to a $300 million tack-on term loan B4, which is upsized from $250 million.

The amount of bonds offered was also reduced as a reflection of existing bonds not tendered in the tender offer.

In addition to the downsize, dealers set price talk in the 7 7/8% area, in line with earlier guidance of 7¾% to 8%, sources said.

Books close at 10 a.m. ET on Wednesday, and the deal is set to price thereafter.

BofA Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, Barclays and Deutsche Bank Securities Inc. are the joint bookrunners for the Rule 144A and Regulation S for life offering.

U.S. Bancorp Investments Inc. and SunTrust Robinson Humphrey Inc. are the co-managers.

The notes become callable after three years at par plus 75% of the coupon and feature a three-year 40% equity clawback.

Proceeds will be used to help fund the acquisition of Pleasanton, Calif.-based food and drug retailer Safeway, Inc.

Albertson’s is a Boise, Idaho-based grocery company.

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