Leading grocer Supervalu Inc. (SVU) has announced the expiration of the senior notes offer worth $300 million due on May 1, 2016. On May 2, 2013, Supervalu commenced the sale of a portion of senior notes carrying an interest rate of 8.00%. They were sold according to a modified “Dutch Auction” tender offer. The company was able to tender $373,053,000 in aggregate principal amount of the Notes as of May 30, 2013 midnight.
On May 20, 2013, Supervalu offered senior notes worth $400 million, due in 2021, to qualified institutional buyers. The company intends to use the proceeds from the sale of these notes for the previously announced tender offer of senior notes on May 2.
The senior note program enhanced the company’s liquidity. Although Supervalu’s cash and cash equivalents went down to $72.0 million as of Feb 23, 2013 from $155.0 million as of Dec 1, 2012, its long-term debt and capital lease obligations decreased from $6.2 billion as of Dec 1, 2012 to $2.8 billion as of Feb 23, 2013.
Supervalu has been adversely affected by the slow economic recovery and low disposable income of the U.S. consumers, which resulted in cautious spending during the quarter. The company streamlined some of its non-performing supermarkets in order to optimize resources and improve business.
On Mar 18, 2013, as a part of its broad-based strategic alternatives, Supervalu sold Albertson's, Jewel-Osco, Acme, Shaw's and Star Market chains, comprising a total of 877 stores, to equity firm, Cerberus Capital Management LP, for $3.3 billion. The company streamlined its operations in order to focus on Save-A-Lot discount stores, as well as its smaller regional chains – Cub, Farm Fresh, Shoppers, Shop 'n Save and Hornbacher's.
Currently, shares of Supervalu carry a Zacks Rank #3 (Hold). Stocks in the retail wholesale sector that are performing well and deserve a mention include Fortune Brands Home & Security Inc. (FBHS) and Haverty Furniture Companies Inc. (HVT) and Green Mountain Coffee Roasters Inc. (GMCR) carrying a Zacks Rank #1 (Strong Buy) and The Buckle Inc. (BKE) carrying a Zacks Rank #2 (Buy).
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