Safeway secures 6.35% noteholder OK to avoid change-of-control offer

By Susanna Moon

Chicago, Oct. 9 – Safeway Inc. said it secured the needed consents to amend its $100 million 6.35% senior notes due Aug. 15, 2017 after extending the solicitation for that series and increasing the consent payment.

The solicitation for the 6.354% notes ended at 5 p.m. ET on Oct. 8, extended from Oct. 3.

The consent fee will be $5.00 for each $1,000 principal amount, doubled from $2.50, with settlement set for Oct. 10, according to a press release.

As previously announced, Safeway solicited consents from holders of $680 million principal amount of three series of senior notes.

The consent fees per $1,000 principal amount were set as follows when the solicitation began Sept. 22:

• $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.

The consent solicitation for the 3.4% notes and 5% notes ended at 5 p.m. ET on Oct. 3.

The company said on Oct. 6 that it obtained the needed consents from holders of a majority of the 3.4% notes by the original deadline and planned to execute a supplemental indenture to the notes.

The consent fee of $5.00 per $1,000 of notes was scheduled for settlement on Oct. 7.

That day, the company also amended and extended the solicitation for the 6.35% notes after holders had delivered consents for $47.13 million, or about 47%, of the 6.35% notes by the original deadline.

More solicitation details

Safeway said at the time that it was not extending the consent solicitation for the 5% notes after failing to receive the needed consents from holders of a majority of the outstanding notes.

The solicitation was 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 previously 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) was the solicitation agent. D.F. King & Co. Inc. (800 967-7635) was the information agent.

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

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