Supervalu (NYSE:SVU) has completed a key step that advances the goal of spinning off the Save-A-Lot grocery banner.
The company began exploring a sale in July 2015, filed an IPO with the Securities & Exchange Commission in January, and now has completed the amendment of its existing $1.5 billion senior secured term loan agreement.
"We are pleased to have been able to work with our term loan lenders to execute this amendment," said Bruce Besanko, exec-VP, COO and 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."
In the event of a spinoff, 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.
Supervalu is also required to retain a minimum equity stake in the publicly traded spinoff Save-A-Lot company.
Save-A-Lot President Ritchie Casteel left the company on March 11 and a replacement was never hired. Save-A-Lot operates roughly 1,360 stores in the United States and is the remaining grocery banner at Supervalu. Once spun off, the company will be wholly focused on its wholesale business.
- see this Supervalu press release