Merchant Innovation

SuperValu Heads Toward Grocery Spin-Off

Supervalu Moves Toward Spinoff

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.


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