The Next Aldi?
Save A Lot has inked a deal to get a $350 million capital infusion at a time when the grocery chain couldn't be better positioned for short- and long-term growth.
The grocer has reached an agreement with a substantial majority of its lenders to recapitalize the business and deleverage its balance sheet. Under the terms of the agreement, the company has completed debt-for-equity and debt-for-debt exchanges that have eliminated $500 million in debt and provided an infusion of $350 million in new capital from a combination of new and existing lenders to support the company’s operations and the acceleration of its transformation plan.
“With the completion of this recapitalization, we are moving forward with a substantially stronger financial foundation as we continue serving our customers and executing our transformation plan,” said Kenneth McGrath, CEO of Save A Lot. “Our ability to achieve this outcome through a fully consensual and out-of-court agreement is a significant achievement and reflects the confidence of our new owners and lenders in our business model and long-term growth prospects. We thank our vendors and retail partners for their trust and support throughout this process, and we look forward to continuing to work closely with them into the future.”
Recession-resistant discounters such as Sav A Lot, like Aldi and others, are poised to lure even more shoppers to their stores as the nation's economy crashes due to the COVID-19 pandemic.
“As our nation is impacted by the COVID-19 pandemic, I cannot say enough about the strength and resilience of our retail partners and our team members," McGrath added. "These incredible people are on the front lines every day, and we thank them for their unwavering dedication to serving our customers and helping our communities manage through this unprecedented situation. We understand the critical role our company plays as our communities rely on us now more than ever to provide food and other essential, high-quality products at low prices."
Save A Lot has been closing stores as it looks to strengthen its balance sheet and stave off possible bankruptcy.
St. Louis, Mo.-based Sav A Lot has more than 1,100 corporate and licensed stores in 33 states and 14 wholesale distribution centers. Held by private equity firm Onex Corp., the company is No. 29 on Progressive Grocer's 2019 Super 50 list of the top grocers in the United States.