Albertsons Companies, Inc. Announces Proposed Senior Notes Offering

Rhea-AI Summary

Albertsons Companies (NYSE: ACI) has announced plans to offer $600 million in new senior notes due 2033. The notes will be co-issued by the Company along with its subsidiaries Safeway Inc., New Albertsons L.P., Albertson's , and Albertsons Safeway

The proceeds from this offering, combined with cash on hand, will be used to redeem the existing $600 million of 7.500% senior notes due 2026 and cover associated fees and expenses. The new notes will be offered to qualified institutional buyers in the United States under Rule 144A and to international investors under Regulation S of the Securities Act.

Positive

• Refinancing $600M of 7.500% senior notes due 2026 with new notes due 2033, potentially improving debt maturity profile
• Company has sufficient cash on hand to support the refinancing transaction

Negative

• Taking on new long-term debt obligations through 2033

Insights

Fixed Income Analyst

This strategic debt refinancing initiative by Albertsons Companies represents a prudent capital management move in the current market environment. The company is targeting the replacement of $600 million in senior notes carrying a 7.500% interest rate, which are set to mature in March 2026, with new notes extending to 2033.

The timing of this refinancing is particularly noteworthy for several reasons:

• With expectations of potential Federal Reserve rate cuts in 2025, Albertsons is positioning itself to potentially lock in more favorable long-term rates before any market shifts
• The extension of maturity from 2026 to 2033 provides enhanced financial flexibility and improved debt maturity ladder management
• The refinancing eliminates near-term refinancing risk associated with the 2026 maturity, reducing financial pressure during a period of intense retail market competition

The structure of the offering, targeting qualified institutional buyers under Rule 144A, suggests strong institutional interest and confidence in Albertsons' long-term financial stability. While the new interest rate hasn't been disclosed, even a modest reduction from the current 7.500% could generate significant annual interest savings, potentially improving free cash flow and financial flexibility.

This refinancing aligns with broader industry trends where retailers are optimizing their capital structures to maintain competitive positions in a challenging market environment. The extension of debt maturity by seven years provides Albertsons with an extended runway to execute its strategic initiatives while maintaining financial stability.

BOISE, Idaho--(BUSINESS WIRE)-- Albertsons Companies, Inc. (NYSE: ACI) (the “Company”) today announced its intention to offer $600 million in aggregate principal amount of new senior notes due 2033 (the “Notes”). The Company and its subsidiaries, Safeway Inc., New Albertsons L.P., Albertson's LLC and Albertsons Safeway LLC, will be co-issuers of the Notes.

The Company intends to use the net proceeds from the offering, together with cash on hand, to (i) redeem or repay in full the $600 million outstanding of its 7.500% senior notes due 2026 which are scheduled to mature on March 15, 2026 (the “Refinancing”) and (ii) pay fees and expenses related to the Refinancing and the issuance of the Notes.

The Notes will be offered in the United States to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons outside the United States in compliance with Regulation S under the Securities Act. The Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This notice is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

About Albertsons Companies

Albertsons Companies is a leading food and drug retailer in the United States. As of November 30, 2024, the Company operated 2,273 retail food and drug stores with 1,732 pharmacies, 405 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. The Company operates stores across 34 states and the District of Columbia under more than 20 well known banners including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, ACME, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci’s Food Lovers Market. In 2023, along with the Albertsons Companies Foundation, the Company contributed more than $350 million in food and financial support, including more than $35 million through our Nourishing Neighbors Program to ensure those living in our communities and those impacted by disasters have enough to eat.

Important Notice Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws. The “forward-looking statements” include our current expectations, assumptions, estimates and projections about our ability to consummate the offering of Notes, the intended use of proceeds thereof, other pending transactions, and other future events. They include statements which the Company believes to be reasonable at this time. You can identify forward-looking statements by the use of words such as “outlook,” “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future” and “intends” and similar expressions which are intended to identify forward-looking statements.

These statements are not guarantees of future performance and are subject to numerous risks and uncertainties which are beyond our control and difficult to predict and could cause actual results to differ materially from the results expressed or implied by the statements.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements and risk factors. Forward-looking statements contained in this press release reflect our view only as of the date of this press release. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In evaluating our forward-looking statements, you should carefully consider the risks and uncertainties more fully described in the “Risk Factors” section or other sections in our reports filed with the SEC including the most recent annual report on Form 10-K and any subsequent periodic reports on Form 10-Q and current reports on Form 8-K.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250218842017/en/

For Investor Relations, contact investor-relations@albertsons.com

For Media Relations, contact media@albertsons.com

Source: Albertsons Companies, Inc.

FAQ

What is the size of Albertsons Companies' (ACI) new senior notes offering in 2033?

Albertsons Companies is offering $600 million in aggregate principal amount of new senior notes due 2033.

How will Albertsons (ACI) use the proceeds from its new senior notes offering?

ACI will use the proceeds, along with cash on hand, to redeem $600 million of 7.500% senior notes due 2026 and pay related fees and expenses.

Which subsidiaries are co-issuers of ACI's new senior notes?

The co-issuers are Safeway Inc., New Albertsons L.P., Albertson's , and Albertsons Safeway

Who is eligible to purchase ACI's new senior notes offering?

The notes are offered to qualified institutional buyers in the US under Rule 144A and to international investors under Regulation S of the Securities Act.