| Item 1.01. | Entry into a Material Definitive Agreement. |
On February 13, 2023, Albertsons Companies, Inc. (the “Company”), together with its subsidiaries, Safeway Inc., New Albertsons L.P., Albertsons’s LLC and Albertsons Safeway LLC (collectively, the “Subsidiary Co-Issuers” and together with the Company, the “Co-Issuers”), issued $750 million in aggregate principal amount of new 6.500% senior notes due 2028 (the “Notes”). The Notes were sold in the United States to persons reasonably believed to be 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 cash on hand, to (i) repay in full all $750 million outstanding of its 3.500% senior notes due 2023 which are scheduled to mature on February 15, 2023 (the ”Refinancing”) and (ii) pay fees and expenses related to the Refinancing and issuance of the Notes.
The Notes
The Notes were issued pursuant to an indenture, dated February 13, 2023 (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 February 15, 2028.
Interest. Interest on the Notes will be payable semi-annually on February 15 and August 15 of each year, beginning on August 15, 2023.
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.
Security. The Notes are unsecured.
Specified Change of Control Redemption. In the event a “Specified Change of Control” transaction involving a merger, consolidation or sale of the Company with an unaffiliated third party that occurs on or prior to February 15, 2025, the Co-Issuers, or a third party in lieu of the Co-Issuers, may redeem, in whole or in part, the Notes within 120 days after such Specified Change of Control at the following redemption prices: (i) 101.500% if such Notes are redeemed on or prior to February 14, 2024 and (ii) 100.750% if such Notes are redeemed on or after February 15, 2024 and on or prior to February 15, 2025 (including the 120-day period thereafter) plus, in each case, accrued and unpaid interest to (but excluding) the redemption date.
Optional Redemption. Prior to February 15, 2025, 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 106.500% of the principal amount being redeemed, plus all required interest payments due thereon through February 15, 2025 (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 February 15, 2025, over the principal amount being redeemed. In addition, subject to certain conditions, the Co-Issuers may redeem up to 40% of the Notes on or before February 15, 2025, with the net cash proceeds from certain equity offerings at a redemption price equal to 106.500% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to (but excluding) the redemption date.
On or after February 15, 2025, the Notes may be redeemed in whole or in part at the following redemption prices: (i) 103.250% if such Notes are redeemed on or prior to February 14, 2026, (ii) 101.625% if such Notes are redeemed on or after February 15, 2026 and on or prior to February 14, 2027, and (iii) at par thereafter.
