Report: Supervalu sets rate on $2.4B loan for Cerberus sale

Eden Prairie, Minn. --Bloomberg reported Tuesday that Supervalu Inc. has set the rate it will pay on $2.4 billion of loans to fund the sale of five supermarket chains to a Cerberus Capital Management LP-led investor group.

A six-year, $1.5 billion term will pay interest at 5.75 percentage points more than the London interbank offered rate with a 1.25 percent minimum, reported Bloomberg, citing an unnamed source.

Supervalu may sell the debt at 98.5 cents on the dollar, according to the report, and lenders to the term portion are offered one year of 101 soft-call protection – which means that Supervalu will have to pay one-cent more than face value to reprice the debt in its first year.

The financing also includes a $900 million asset-based revolving line of credit that will begin paying interest at 2 percentage points more than Libor, reported Bloomberg, citing a Monday regulatory filing.

Proceeds from the debt will be used to replace a $1.65 billion asset-backed credit line, an $846 million term portion and to refinance $490 million of 7.5% notes that come due in November 2014.

Supervalu is selling its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores and related pharmacies to AB Acquisition LLC, an affiliate of a Cerberus-led investor group, in a transaction valued at $3.3 billion.