01—Abstract
Summary
Summary of the 8-K filed August 15, 2024. Cited figures are marked; the original filing is the authoritative source.
The Kroger Co. filed this Form 8-K on August 15, 2024 to report that it has commenced private exchange offers and consent solicitations for any and all outstanding notes issued by Albertsons Companies, Inc. (ACI) and related entities, for up to $7,441,608,000a aggregate principal amount of new Kroger notes and cash.
The offers are being made in connection with the previously announced merger agreement dated October 13, 2022, under which Kettle Merger Sub, Inc. will merge into ACI, with ACI surviving as a wholly owned subsidiary of Kroger. The exchange offers and consent solicitations are conditioned on completion of the merger, and the merger itself is not conditioned on the exchange offers. The consent solicitations seek to adopt proposed amendments to the ACI indentures that would eliminate substantially all restrictive covenants, certain Events of Default, the reporting covenant, merger and asset-conveyance restrictions, the subsidiary guarantee covenant, and change-of-control repurchase obligations.
Eligible holders who tender by the Early Participation Date of 5:00 p.m. New York City time on August 28, 2024 would receive total consideration per $1,000b principal amount of $970 in Kroger notes as exchange consideration, a $30 early participation premium in Kroger notes, and a $1.00 cash consent payment. Holders tendering after that date and before the Expiration Date of 5:00 p.m.
New York City time on September 13, 2024 would receive only the exchange consideration. The filing states the merger is expected to close in the fourth quarter of calendar 2024.
For investors, the key points are the scale of the debt exchange, the consent-driven removal of protective covenants from the ACI notes if the requisite consents are obtained, and the dependence of the entire transaction on the merger closing. The exchange is structured as a private offering to eligible holders only, and the new Kroger notes carry the same interest rates, maturities, and redemption terms as the corresponding ACI notes.
02—Key points
Key Highlights
- Kroger commenced exchange offers on August 15, 2024 for any and all outstanding notes issued by Albertsons Companies, Inc. and related issuers, for up to $7,441,608,000 aggregate principal amount of new Kroger notes and cash.
- Early Participation Date is 5:00 p.m. New York City time on August 28, 2024; Expiration Date is 5:00 p.m. New York City time on September 13, 2024, unless extended or terminated.
- Early tendering holders receive $970 principal amount of Kroger notes, a $30 early participation premium in Kroger notes, and a $1.00 cash consent payment per $1,000 principal amount of ACI notes, for total consideration of $1,000 in Kroger notes plus $1.00 in cash.
- Concurrent consent solicitations seek to eliminate substantially all restrictive covenants, certain Events of Default, the reporting covenant, merger and asset-conveyance restrictions, the subsidiary guarantee covenant, and change-of-control repurchase obligations from the ACI indentures.
- The exchange offers and consent solicitations are conditioned on completion of the merger under the October 13, 2022 Merger Agreement, while the merger is not conditioned on the exchange offers.
- The merger is expected to close during the fourth quarter of calendar year 2024, and the Settlement Date for the exchange offers is expected on or promptly after the merger closing date.
- The offers are made only to eligible holders in a private offering exempt from Securities Act registration, and the new Kroger notes have not been registered under the Securities Act of 1933.
03—Questions
Frequently Asked Questions
What is Kroger offering to holders of Albertsons notes?
Kroger is offering to exchange any and all outstanding ACI notes for new Kroger notes and cash, for up to $7,441,608,000 aggregate principal amount of new Kroger notes and cash. For each $1,000 principal amount validly tendered by the Early Participation Date, holders receive $970 in Kroger notes as exchange consideration, a $30 early participation premium in Kroger notes, and a $1.00 cash consent payment.
What is the deadline for tendering ACI notes?
Holders must tender by 5:00 p.m. New York City time on August 28, 2024 (the Early Participation Date) to receive the early participation premium and consent payment. The Expiration Date is 5:00 p.m. New York City time on September 13, 2024, unless extended or terminated. Tenders after the Early Participation Date receive only the exchange consideration.
What changes would the consent solicitations make to the ACI notes?
The proposed amendments would eliminate substantially all restrictive covenants, certain Events of Default, the reporting covenant, restrictions on consolidating, merging, or conveying assets, the subsidiary guarantee covenant, and obligations to offer to repurchase notes upon certain change of control transactions. Required consent is a majority in principal amount of each affected series, or 66 2/3% for notes issued by New Albertsons, L.P.
Is the exchange conditioned on the merger closing, and when is the merger expected to close?
The exchange offers and consent solicitations are conditioned upon completion of the merger, and Kroger cannot waive that condition. The merger itself is not conditioned on the exchange offers. The filing states the merger is expected to close during the fourth quarter of calendar year 2024.
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