Supervalu has come to agreement with New Albertsons Inc. and Albertsons LLC to wind down the transition services it has been providing to the companies.
The agreement calls for Supervalu to receive $50 million from Albertsons, payable in eight payments of $6.25 million every six months, in exchange for winding down its transition service agreements with Albertsons. These payments are separate from the fees Supervalu currently receives under the TSA. The TSA provides back-office services to Albertsons LLC — which operates Albertsons stores purchased by the Cerberus Capital Management consortium in 2006 — and New Albertsons Inc., which was formed following the same group’s purchase of the Jewel, Acme and Shaw’s banners from Supervalu in 2013.
In a filing with the Securities and Exchange Commission, Supervalu said the initial TSAs with Albertsons — which were to have expired in September — were renewed last year and are now scheduled to end in September 2016. In 2014, Supervalu received around $240 million as a result of the such TSAs.
According to the filing, the parties also agreed to negotiate in good faith if either the costs associated with the transition and wind down services are “materially higher” — 5% or more — than anticipated by the Supervalu, or if Supervalu is not performing in all material respects the transition and wind down services as needed to support NAI’s and Albertson’s LLC’s transition.
Supervalu said it expects the $50 million in fees would cover the its costs of providing the transition and wind down services and may help to offset the decline in TSA fees resulting from stores and distribution centers being removed from the TSA as part of the transition.
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