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Supervalu lays financial groundwork for Save-A-Lot spinoff


Grocery giant Supervalu Inc. is one step closer to separating its troubled Save-A-Lot banner.

Supervalu, which initially announced it was exploring spinning off Save-A-Lot into a standalone, publicly traded company in July 2015, has completed the amendment of an existing $1.5 billion senior secured term loan agreement. This amendment permits the company and its subsidiaries to undertake certain transactions deemed necessary to enable a spinoff of Save-A-Lot.

In the event a spinoff of Save-A-Lot is consummated, the 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 a minimum equity stake in new Save-A-Lot company, and possibly use the stake to reduce the balance of the $1.5 billion term loan.

In addition, the amendment increases Supervalu’s flexibility to execute certain sale and leaseback transactions and acquisitions under the term loan agreement. The maturity date of the term loan remains March 21, 2019.

In early December 2015, Supervalu said current Save-A-Lot CEO Eric Claus would continue to serve in that role after the spinoff. Claus, a longtime former senior executive with The Great Atlantic & Pacific Tea Company, joined Save-A-Lot in December 2015.

Serving as president of Save-A-Lot after the separation will be Ritchie Casteel. The veteran Albertson’s executive join Supervalu as president and CEO of Save-A-Lot in 2013. Save-A-Lot reported declining sales in the third and fourth quarters of fiscal 2016.

“We are pleased to have been able to work with our term loan lenders to execute this amendment,” said Bruce Besanko, executive VP, COO and CFO of Supervalu. “The company now has the flexibility under its credit agreements to further explore the previously announced potential separation of Save-A-Lot into a stand-alone, publicly traded company.”

Goldman Sachs Bank USA and Barclays acted as joint lead book-runners and joint lead arrangers on the amendment.

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