| Item 1.01. | Entry into a Material Definitive Agreement. |
On December 22, 2020, Albertsons Companies, Inc. (the “Company”), together with its subsidiaries, Safeway Inc., New Albertsons L.P. and Albertsons’s LLC (collectively, the “Subsidiary Co-Issuers” and together with the Company, the “Co-Issuers”), issued $600 million in aggregate principal amount of additional 3.500% senior notes due 2029 (the “Notes”). The Notes were issued under the same indenture as those issued by the Company on August 31, 2020. The Notes were sold in the United States to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act. The Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
The Company intends to use the net proceeds from the offering, together with approximately $230 million of cash on hand, to (i) fund a partial redemption of $800 million principal amount of its outstanding 5.750% senior notes due 2025 (the “Redemption”) and (ii) pay fees and expenses related to the Redemption and the issuance of the Notes. The Company expects the Redemption to occur on January 4, 2021.
The Notes
The Notes were issued pursuant to an indenture, dated August 31, 2020 (the “Indenture”), by and among the Co-Issuers, the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee. The Notes will mature on March 15, 2029.
Interest. Interest on the Notes will be payable semi-annually on March 15 and September 15 of each year, beginning on March 15, 2021. Interest began to accrue on August 31, 2020.
Guarantees. The Notes will be guaranteed on a senior unsecured basis by all of the Company’s existing and future direct and indirect domestic subsidiaries (other than the Subsidiary Co-Issuers) that are obligors under the Company’s asset-based revolving credit facility and the Company’s 3.50% senior notes due 2023, 5.750% senior notes due 2025, 3.250% senior notes due 2026, 7.5% senior notes due 2026, 4.625% senior notes due 2027, 5.875% senior notes due 2028, 3.500% senior notes due 2029 and 4.875% senior notes due 2030.
Security. The Notes are unsecured.
Optional Redemption. Prior to September 15, 2023, the Notes may be redeemed in whole or in part at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, plus an applicable make-whole premium equal to the greater of (i) 1.0% and (ii) the excess of the sum of the present value of 101.750% of the principal amount being redeemed, plus all required interest payments due thereon through September 15, 2023 (exclusive of interest accrued to the date of redemption), discounted to the date of redemption at a rate equal to the then-current interest rate on U.S. Treasury securities of comparable maturities plus 50 basis points and, for the avoidance of doubt, assuming that the interest rate in effect on the date of redemption is the interest rate that will be in effect through September 15, 2023, over the principal amount being redeemed. In addition, subject to certain conditions, the Co-Issuers may redeem up to 40% of the Notes before September 15, 2023, with the net cash proceeds from certain equity offerings at a redemption price equal to 103.500% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to (but excluding) the redemption date.
On or after September 15, 2023, the Notes may be redeemed in whole or in part at the following redemption prices: (i) 101.750% if such Notes are redeemed on or prior to September 14, 2024, (ii) 100.875% if such Notes are redeemed on or after September 15, 2024 and on or prior to September 14, 2025, and (iii) at par thereafter.
Mandatory Redemption. The Notes do not require the making of any mandatory redemption or sinking fund payments.
Repurchase of the Notes at the Option of Holders. Upon a “change of control” transaction (which includes, subject to certain exceptions, (i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all the assets of the Company and its restricted subsidiaries, taken as a whole, to a person other than any of the Equity Investors or (ii) the Company becoming aware of the acquisition by any person or group, other than any of the Equity Investors, of more than 50% of the voting power of the Company or any of its direct or indirect parent companies and as a result thereof, a “ratings event” occurs (i.e., the
