Albertsons issues $600M in senior notes due 2033

Albertsons Companies , Inc. (NYSE:ACI), a $12.46 billion market cap grocery retailer headquartered in Boise, Idaho, has entered into a significant financial agreement, issuing $600 million of 6.250% senior notes due 2033, as reported today. The company, which maintains a "GOOD" financial health score according to InvestingPro, completed the transaction with the aim of refinancing existing debt and covering related expenses.

The notes, which will mature on March 15, 2033, were offered to qualified institutional buyers in the United States and to non-U.S. persons abroad, in accordance with relevant securities regulations. These notes have not been registered under the Securities Act or state securities laws and are subject to restrictions on their sale in the U.S.

Albertsons plans to use the proceeds from this issuance, along with available cash, to redeem all $600 million of its 7.500% senior notes due 2026, which are set to mature on March 15, 2026. This strategic move is intended to manage the company’s long-term debt obligations effectively, particularly important given its total debt of $14.21 billion and debt-to-equity ratio of 4.22. For detailed analysis of Albertsons’ debt structure and financial metrics, investors can access the comprehensive Pro Research Report available on InvestingPro.

The newly issued notes will accrue interest payable semi-annually and are guaranteed by Albertsons’ existing and future direct and indirect domestic subsidiaries. They are unsecured and offer investors an optional redemption clause before March 15, 2028, under certain conditions, including a make-whole premium. After this date, the notes can be redeemed at decreasing premiums until they can be redeemed at par.

The indenture governing the notes includes various covenants that impose restrictions on the company and its subsidiaries, such as limitations on creating liens on assets and engaging in certain types of mergers or consolidations.

In the event of a change of control, which could include a significant sale of assets or a shift in the majority of voting power away from current equity investors, Albertsons is obliged to offer to repurchase the notes at a premium. The indenture also outlines conditions that would constitute an event of default, including nonpayment and failure to observe covenants.

The information in this article is based on a press release statement. Albertsons’ decision to refinance its debt through this new issuance reflects its ongoing financial management strategies within the competitive grocery retail market. The company’s stock is currently trading near its 52-week high, with strong returns over the past three months. InvestingPro subscribers have access to over 30 additional financial metrics and insights about Albertsons, including exclusive analyst recommendations and Fair Value estimates.

In other recent news, Albertsons Companies, Inc. has announced its plan to offer $600 million in senior notes due in 2033. The proceeds from this offering will be used to refinance existing debt, specifically targeting the repayment of $600 million in senior notes due in 2026. Albertsons has also made headlines with the upcoming leadership transition, as Susan Morris is set to take over as CEO on May 1, 2025, succeeding Vivek Sankaran. The company has reaffirmed its Fiscal 2024 Outlook, maintaining projections for identical sales growth, adjusted EBITDA, and other financial metrics.

Additionally, Albertsons is set to join the S&P MidCap 400, replacing Aspen Technology Inc (NASDAQ:AZPN). due to its acquisition by Emerson (NYSE:EMR) Electric Co. This inclusion is anticipated to enhance the company’s visibility among institutional investors. In a recent board change, Frank Bruno has been appointed as a new director following Stephen Feinberg’s resignation. These developments come as Albertsons continues to navigate the competitive grocery retail market.

The company’s strategic financial moves and leadership changes demonstrate a focus on maintaining a strong financial position and accelerating growth. Albertsons continues to operate a vast network of retail food and drug stores across the United States, contributing significantly to community support initiatives.

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