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New loan agreement primes Save-A-Lot spinoff

New loan agreement primes Save-A-Lot spinoff

In another step toward spinning off its discount Save-A-Lot division, Supervalu said Monday that it has amended its term loan agreements.

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 while Supervalu reduces its term loan balance a minimum of $350 million, including proceeds of the Save-A-Lot debt issuance.


“We are pleased to have been able to work with our term loan lenders to execute this amendment,” Supervalu COO and CFO Bruce Besanko said in a statement. “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.”


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The amendment requires Supervalu to retain a minimum equity stake in the spun-off company. Although the company didn't specify that stake Monday, Besanko said last month he anticipated around 40%, up from earlier plans for 19%. Net cash proceeds from the sale of that stock could be required to be used to reduce the term loan balance, the company added.

The amendment also increases Supervalu's flexibility to execute sale-leaseback transactions and acquisitions under the term loan agreement.

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