Supervalu Inc., the third-largest U.S. grocery chain, cut the interest rate it will pay on a $1.5 billion term loan it’s seeking to support the sale of five supermarket chains to a Cerberus Capital Management LP-led investor group, according to a person with knowledge of the transaction.
The six-year covenant-lite loan will now pay interest at 5 percentage points to 5.25 percentage points more than the London interbank offered rate, down from 5.75 percentage points, said the person, who asked not to be identified because the information is private. The Libor floor remains unchanged at 1.25 percent.
Supervalu is proposing to sell the loan at 99 cents on the dollar, compared with 98.5 cents initially proposed, the person said, increasing proceeds for the company and reducing the yield to investors.
Lenders are being offered one year of 101 soft-call protection, the person said, meaning that Supervalu will have to pay one-cent more than face value to reprice the debt in its first year.
Goldman Sachs Group Inc., Credit Suisse AG, Morgan Stanley, Bank of America Corp. and Barclays Plc are arranging the loan and commitments are due tomorrow, according to the person.