U.S. grocery chain Albertsons Cos. Inc. on March 12 amended an asset-based revolving credit agreement and a debt commitment letter as part of its proposed merger with drug store chain Rite Aid Corp.
The amendment to the credit agreement allows the commitment of a term loan facility and a senior bridge facility and executes other modifications relating to the merger.
In addition, the company amended a debt commitment letter that provides the company with $4.67 billion of commitments to a new $5 billion best efforts asset-based revolving credit facility and incremental commitments under the facility of $1 billion.
Privately held Albertsons will also get a new asset-based term loan facility of $1.2 billion and a new secured bridge loan facility of $1.2 billion less the gross proceeds of new notes that are obtained on or before the closing date of the merger with Rite Aid, if it is approved.
Proceeds from the financing will be used to partially refinance certain of Rite Aid's existing debt and pay merger-related fees and expenses, among other things.
The company will only use the best-efforts facility if the additional $333 million of commitments are fully allocated to new or existing lenders before the date of the merger completion.
As part of the merger, Rite Aid has agreed to use commercially reasonable efforts to provide cooperation as may be reasonably requested by Albertsons relating to the financing.
The company entered the debt commitment letter with Bank of America NA, Merrill Lynch Pierce Fenner & Smith Inc., Credit Suisse AG, Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA, Morgan Stanley Senior Funding Inc., Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Islands Branch, Barclays Bank PLC, Royal Bank of Canada, Wells Fargo Bank NA, Wells Fargo Securities LLC, PNC Bank NA, PNC Capital Markets LLC, Suntrust Robinson Humphrey Inc., SunTrust Bank, U.S. Bank NA, The Bank of Tokyo-Mitsubishi UFJ Ltd., Bank of Montreal, Fifth Third Bank, TD Bank NA and Capital One NA.
The banks' commitment to providing the financing is subject to certain conditions, including, among other things, the completion of deal in accordance with terms of the merger agreement and the completion of a third-party appraisal and field examination of the assets of Rite Aid and its units; minimum excess availability under the applicable asset-based revolving credit facility of not less than $2 billion; and certain other customary closing conditions.
