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Supervalu Gets $2.4 Billion in Loans Backing Sale to Cerberus

Jan. 10 (Bloomberg) -- Supervalu Inc. obtained $2.4 billion in loans to support the purchase of five of its grocery chains by Cerberus Capital Management LP.

Wells Fargo & Co. provided a $900 million asset-based revolving credit line to the Eden Prairie, Minnesota-based retailer, while Goldman Sachs & Co., Credit Suisse AG, Morgan Stanley, Bank of America Corp. and Barclays Plc arranged a $1.5 billion term loan, according to a statement distributed today by Business Wire.

Supervalu is selling its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores and related pharmacies to AB Acquisition LLC, an affiliate of a Cerberus-led investor group in a transaction valued at $3.3 billion, according to the statement.

Proceeds from the debt will be used to replace a $1.65 billion asset-backed credit line, an $846 million term portion and to refinance $490 million of 7.5 percent notes that come due in November 2014, according to the statement. The existing line of credit was due to expire in August 2017, while the term loan was set to mature in August 2018, according to data compiled by Bloomberg.

Supervalu’s B loan rose to 101.9 cents on the dollar today, according to prices compiled by Bloomberg. The company’s $490 million of senior secured bonds that are being called rose 1.375 cents to 100.25 cents on the dollar at 9:51 a.m. in New York, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority.

In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t. Asset-backed debt is guaranteed by a company’s receivables and inventory.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.

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