Roundy’s, Inc. (“Roundy’s”) (NYSE: RNDY), a leading grocer in the Midwest, today announced that it had entered into definitive agreements to sell 18 Rainbow stores in the Minneapolis/St. Paul market to a group of local grocery retailers, including SUPERVALU INC.
The aggregate sale price for the 18 Rainbow stores is approximately $65 million in cash plus the proceeds from inventory that will be sold at the closing of the transaction. In addition, as part of the transaction, the buyers will assume the lease obligations and certain multi-employer pension liabilities related to the acquired stores. Roundy’s is actively seeking additional buyers for its remaining 9 Rainbow stores, and at the conclusion of that process expects to either sell or close those remaining stores and fully exit the Minneapolis/St. Paul market.
The transaction is expected to close during the third quarter, subject to satisfaction or waiver of closing conditions in the definitive agreements. The Company expects to use the sale proceeds from the transaction to pay down borrowings under its term loan and asset based revolving credit facility.
Commenting on the sale, Roundy’s Chairman, President, and Chief Executive Officer, Robert A. Mariano said, “The economic downturn over the last few years, coupled with an increased competitive footprint in the Minneapolis/St. Paul Market, has made it difficult for Roundy’s to keep the Rainbow banner competitive. However, we believe the sale of these Rainbow stores to this group of local operators will provide those stores better stewardship in serving their communities in the Minneapolis/St. Paul market going forward. The transaction will also allow us to better focus strategically on growing our Mariano’s banner in the Chicago market and strengthening our business in our core Wisconsin markets.”Moelis & Company is acting as Roundy’s exclusive financial advisor in connection with the transaction. Q1 2014 Earnings Conference Call The Company will host a conference call today to discuss financial results for the first quarter ended March 29, 2014 and the sale of the Rainbow stores. Participants from the Company will be Chairman and Chief Executive Officer, Robert A. Mariano, and Darren W. Karst, Executive Vice President and Chief Financial Officer.
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