Spartan Sells Ownership in Joint Venture, Earmarks Proceeds to Reduce Debt

GRAND RAPIDS, Mich. - Spartan Stores, Inc. has sold its 65 percent ownership interest in a retail store to its former joint venture partner.

Spartan's annualized retail sales and after-tax earnings from the joint venture approximated $20 million and $0.3 million, respectively, the proceeds of which will be used to repay previous advances and $2 million of related debt principal. In turn, Spartan will reduce the amounts outstanding under the company's revolving credit facility by about $2.5 million, resulting in a total debt reduction of $4.5 million.

Spartan, the nation's eighth-largest grocery distributor, with warehouse facilities in Grand Rapids and Plymouth, Mich., entered into a 10-year distribution supply agreement with the acquirer and expects to record an after-tax gain of about $0.4 million in the fiscal 2005 third quarter, due to the sale transaction.

While future reported retail sales will be lower because of the sale, the company said its prior comparable-store sales guidance is not impacted, since sales from the joint venture store were not included in Spartan's comparable-store sales totals.

Spartan distributes more than 40,000 private label and national brand products to over 300 independent grocery stores in its home state, and also owns and operates 54 retail supermarkets and 21 deep-discount food and drug stores in Michigan and Ohio, including Family Fare Supermarkets, Glen's Markets, and the Pharm.
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