Supervalu completed the amendment of its existing $1.5 billion senior secured term loan agreement, which sets the stage for the Minneapolis-based wholesaler to spin-off its St. Louis-based Save-A-Lot subsidiary into a stand-alone, publicly traded company. Supervalu began exploring the sale of Save-A-Lot in July 2015 and filed an IPO with the Securities & Exchange Commission in January.
“We are pleased to have been able to work with our term loan lenders to execute this amendment,” said Bruce Besanko, Supervalu’s EVP/COO/CFO. “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.”
If Save-A-Lot completes the spin-off, 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, including with net cash proceeds of the Save-A-Lot debt issuance.
Supervalu also would be required to retain a certain minimum equity stake in the spun-off Save-A-Lot company and could be required to use net cash proceeds from any future cash-in of that retained equity stake to reduce the $1.5 billion term loan balance.
The amendment also increases Supervalu’s flexibility to execute certain sale and leaseback transactions and acquisitions under the term loan. Goldman Sachs Bank USA and Barclays acted as joint lead book-runners and joint lead arrangers on the amendment; the loan’s majority date remains March 21, 2019.