Albertsons acquisition of Safeway challenged
Challenger claims deal violated terms governing Safeway shares
Albertsons Companies Inc. has announced that it has received a claim that its acquisition of Safeway violated terms governing Safeway notes.
Albertsons' outside counsel received a letter from a law firm purporting to represent more than 45 percent of the outstanding principal amount of Safeway’s 7.25 percent Senior Debentures, due February 2031 (the “SWY 2031 Notes”). Safeway is a wholly owned subsidiary of Albertsons.
The letter asserts that the Albertsons/Safeway financing structure (that has been in place without challenge since the closing of the Albertsons/Safeway transaction in January 2015 and was fully disclosed in the related proxy statement distributed in June 2014) violates a covenant in the indenture governing Safeway notes. The letter requests the SWY 2031 Notes trustee to declare Safeway in default under the terms of the indenture governing Safeway notes.
Albertsons and Safeway believe their financing structure has been—and continues to be—in full compliance with the covenants governing the Safeway notes.
On January 30, 2015 AB Acquisition LLC (the owner of Albertson’s LLC) and Safeway Inc. announced they had completed their proposed merger. Under the terms of the merger Albertsons was to acquire all outstanding shares of Safeway. Safeway shareholders were to receive $34.92 per share in cash.