Albertsons cuts spread on $1.5 billion loan to Libor plus 300 bps

By Sara Rosenberg

New York, May 2 – Albertsons Cos. Inc. reduced pricing on its $1.5 billion five-year asset-based last-out term loan to Libor plus 300 basis points from Libor plus 350 bps, according to a market source.

As before, the term loan has a 0% Libor floor, an original issue discount of 99.5, 101 soft call protection for six months and a ticking fee of half the margin from days 46 to 75, the full margin from days 76 to 105 and the full margin plus Libor thereafter.

The term loan will fund into a segregated account after day 106.

Included in the term loan is a minimum fixed charge coverage ratio covenant of 1 time, tested when excess availability at any time is less than 10% of the loan cap, which has a $250 million floor.

Earlier in syndication, the term loan was upsized from $1.2 billion.

Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA, Morgan Stanley Senior Funding Inc., Barclays, Deutsche Bank Securities Inc., RBC Capital Markets LLC, Wells Fargo Securities LLC and MUFG are the joint lead arrangers on the deal.

Commitments were scheduled to be due at noon ET on Wednesday, the source added.

Proceeds will be used to refinance existing debt at Rite Aid Corp. and, if applicable, fund the cash portion of the Rite Aid merger.

Albertsons is a Boise, Idaho-based food and drug retailer. Rite Aid is a Camp Hill, Pa., national drugstore chain.

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