SuperValu Heads Toward Grocery Spin-Off

TV spinoffs have plenty of blemishes on their record, with few surviving past their often mercifully short first seasons. The same story also plays out in the retail sphere: When a merchant decides to spin off one of its subsidiaries, they better be sure it has more than a decent chance at landing on its feet.

At the very least, it seems like Minnesota-based grocery chain SuperValu and its soon-to-be ex-subsidiary Save-A-Lot are heading in the right direction. The Minnesota Star Tribune is reporting that SuperValu has renegotiated a loan agreement that will see it retain 40 percent of common stock in the newly spun-off Save-A-Lot franchise. The loan agreement, which weighs in at a hefty $1.5 billion, requires SuperValu to issue at least $400 million of long-term debt if Save-A-Lot is eventually incorporated as its own independent business entity, and within two years after that date, its ownership must be reduced to a maximum of a 20-percent stake.

“We are pleased to have been able to work with our term loan lenders to execute this amendment,” EVP, COO and CFO Bruce Besanko said in a statement. “[SuperValu] now has the flexibility under its credit agreements to further explore the previously announced potential separation of Save-A-Lot into a stand-alone, publicly traded company.”

Stabilizing the financials is a step many retailers interested in spinning off subsidiaries never get covered, but SuperValu is doing what it can to emancipate the more than 1,300 Save-A-Lot stores currently under its control.