Supervalu Inc. (SVU - Free Report) , one of the largest grocery chains in the US, has completed its debt financing transactions worth around $2.5 billion, which was announced in July.
During its first quarter fiscal 2013 conference call held in July, Supervalu had announced plans to replace its senior credit facility with an asset-based lending facility and term loan secured by a portion of the company’s real estate in order to improve its financial flexibility. Recently, Supervalu replaced its existing debt obligations with a new five-year $1.65 billion asset-based revolving credit facility and a new six-year $850 million term loan.
While the revolving credit facility is secured by the company’s inventory, credit card receivables and certain other assets, term loan is against a portion of the company’s real estate and equipment. These debt instruments replace the company’s current debt obligations that comprise a $1.5 billion revolving credit facility (scheduled to mature in April 2015; a $574 million term loan (scheduled to mature in October 2015); and a $446 million term loan (scheduled to mature in April 2018).
Supervalu, based in Eden Prairie, Minnesota, runs its retail operations under various banners, such as Albertsons, Save-A-Lot, Shaw's Supermarkets, Jewel-Osco, Acme Markets, Shoppers Food & Pharmacy, Cub Foods, Farm Fresh, Lucky, Shop 'n Save, Scott's, Star Markets, Bristol Farms, bigg's, Hornbacher's, and Sunflower Market. The company operates through three retail food store formats: combination stores, food stores, and limited assortment food stores. The combination stores refer to the combination of food and pharmacy.
We currently have a Neutral recommendation on Supervalu. The stock carries a Zacks #4 Rank (a short-term ‘Sell rating).