(Bloomberg) — Kroger Co. plans to sound out investors for a possible multi-part bond sale and has begun an exchange offer for debt issued by takeover target Albertsons Cos., as antitrust scrutiny looms over the potential tie-up.
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The supermarket chain has asked Citigroup Inc. and Wells Fargo & Co. to arrange investor calls starting Monday, with the potential to issue unsecured bonds following the calls. At the same time, the Cincinnati, Ohio-based company is offering cash and as much as $7.44 billion of new notes to Albertsons’ bondholders.
But there is no guarantee that the deal announced in 2022, valued at $24.6 billion, will actually go through as the companies stare down antitrust scrutiny. Last month, a Colorado judge temporarily halted the merger. The Federal Trade Commission and a group of states have separately sued to challenge the deal in Oregon federal court. A hearing in that case is set to begin on Aug. 26.
Should the transaction not go through, both the new unsecured bonds and the exchange offer would no longer be necessary.
A representative from Kroger referred to their statement announcing the debt exchange offer and declined to comment further.
Creditors have pushed back in recent months on some tender offers that they view as unfair to them. In May, holders of Spectrum Brands Inc. senior unsecured notes organized after the company presented them with an offer they didn’t view as satisfactory. In other cases, issuers have opted for tendering their obligations instead of calling them, which can present modest savings, but leave bondholders feeling shortchanged.
–With assistance from Josyana Joshua and Emma Sanchez.
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