Supervalu Inc. (SVU), the third-largest U.S. grocery chain, reduced the discount at which it’s offering to sell a $850 million covenant-lite term loan to refinance debt, according to a person with knowledge of the transaction.
The six-year debt will now be sold at 97 cents on the dollar, up from 96 cents, the person said, increasing proceeds for the company and reducing the yield to investors.
The loan pays interest at 6.75 percentage points more than the London interbank offered rate, with a 1.25 percent minimum on the benchmark, according to data compiled by Bloomberg.
Lenders are being offered call protection for two years, the data show, meaning the company would have to pay a premium of two cents in the first year and one cent in the second year to refinance the debt.
Credit Suisse Group AG and Barclays Plc are arranging the loan for the Eden Prairie, Minnesota-based company and lenders must let the banks know by today whether they will participate in the deal, said the person. The debt is expected to be distributed to investors tomorrow, according to the person.
The company is also seeking a $1.65 billion asset-based revolving line of credit which is being arranged by Wells Fargo & Co., U.S. Bancorp, Barclays and Credit Suisse Group AG, Bloomberg data show.
Jeff Swanson, a spokesman for Supervalu, didn’t immediately respond to an e-mail seeking comment.
Covenant-lite debt doesn’t carry typical lender protection such as financial-maintenance requirements.
To contact the editor responsible for this story: Chapin Wright at firstname.lastname@example.org