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SuperValu Offers $400M Senior Notes

Zacks Equity Research

SUPERVALU Inc. (SVU) recently offered senior notes worth $400 million, due 2021, to qualified institutional buyers. The company intends to use the proceeds from these notes for the previously announced tender offer of senior notes on May 02.

Earlier on May 2, the company had offered senior notes worth $300 million due on May 1, 2016. The senior notes carry an interest rate of 8.00% and will be sold according to a modified “Dutch Auction” tender offer. The procedure is expected to close on May 30, 2013. As of May 2, 2013, the company had $1.0 billion aggregate principal amount of outstanding notes.

The senior note program will improve the company’s liquidity strength. Although the company’s cash and cash equivalents as of Feb 23, 2013 were $72.0 million, down from $155.0 million as of Dec 1, 2012, its long-term debt and capital lease obligations fell drastically to $2.8 billion as of Feb 23, 2013 from $6.2 billion as of Dec 1, 2012.

Supervalu posted adjusted loss per share of 14 cents for the fourth quarter of fiscal 2013 ended Feb 23, 2013, compared with earnings of 2 cents per share in the comparable quarter a year ago. Total sales also dipped 2.3% to $3.9 billion in the quarter. Supervalu has been adversely affected by the slow economic recovery and low disposable income of U.S. consumers, which resulted in cautious spending in fourth quarter of fiscal 2013. The company streamlined some of its non-performing supermarkets in order to optimize resources and improve business.

Very recently in March, 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 intended to streamline 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.

SUPERVALU carries a Zacks Rank #3 (Hold).

Stocks in the retail wholesale sector that are performing well and deserve a mention include Haverty Furniture Companies Inc. (HVT), and Etablissements Delhaize Fr (DEG) carrying a Zacks Rank #1 (Strong Buy) and The Kroger Co. (KR) carrying a Zacks Rank #2 (Buy).

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Read the Full Research Report on KR

Read the Full Research Report on DEG

Read the Full Research Report on HVT

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