Safeway seeks OK to avoid change-of-control offer under three series

By Susanna Moon

Chicago, Sept. 22 – Safeway Inc. said it began a consent solicitation for $680 million principal amount of three series of senior notes.

The company is soliciting consents to remove its obligation to offer to repurchase the notes at 101 plus accrued interest upon closing its proposed merger with an affiliate of Albertson’s, LLC, which is expected to close in the fourth quarter, according to a press release.

The consent fees are as follows:

• $5.00 for the $80 million outstanding 3.4% senior notes due Dec. 1, 2016;

• $2.50 for the $100 million 6.35% senior notes due Aug. 15, 2017; and

• $10.00 for the $500 million 5% senior notes due Aug. 15, 2019.

To receive the consent fees, holders must deliver their consents by 5 p.m. ET on Oct. 3.

The solicitation is conditioned on the company securing the needed majority consents from that series of notes but is not conditioned on closing of the merger.

Safeway also said that, whether or not the proposed amendment is approved, all three series of the senior notes that remain outstanding after the merger will be secured by substantially all of the assets of Safeway and Albertsons.

The notes will benefit from all the same collateral and guarantees as, and be secured on an equal and ratable basis with, the new senior secured notes due 2022 that will be issued as part of the financing for the merger, the company said.

Safeway’s 3.95% senior notes due 2020, 4.75% senior notes due 2021, 7.45% senior debentures due 2027 and 7.25% senior debentures due 2031, which will remain outstanding after the merger, will become secured by assets of Safeway and its subsidiaries but not by the other assets of Safeway and Albertson’s that will secure the new second-lien notes or the three series of senior notes.

BofA Merrill Lynch (888 292-0070 or 980 388-3646 collect) is the solicitation agent. D.F. King & Co. Inc. (800 967-7635) is the information agent.

Safeway is a Pleasanton, Calif.-based food and drug retailer.

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