BOISE, ID – Safeway, part of Albertsons Companies, will sell Safeway's 49 percent interest in Mexico-based retailer Casa Ley to Tenedora for $6.45 billion Mexican pesos—equivalent to $345 million USD. Subject to Mexican antitrust approval and other customary closing conditions, the sale is expected to close by February 28th.
Former holders of common stock of Safeway Inc. received what are called Contingent Value Rights, or CVRs, as part of the January 30th, 2015, merger of Safeway into a wholly-owned subsidiary of Albertsons Companies. In a recent press release, Albertsons Companies explains that Casa Ley’s CVRs “represent the right to receive certain net proceeds from the sale of Safeway’s interest in Casa Ley.”
While there are no guarantees that the sale will close or that the net proceeds will amount to what the company anticipates, it goes on to explain, “Based on a CVR Agreement entered into at the time of the merger, the amount of net proceeds to be distributed will be based on the gross proceeds from the sale of the Casa Ley interest less expenses less taxes (calculated at a tax rate of 39.25% agreed in the CVR Agreement). The net proceeds per CVR to be distributed to Casa Ley Holders at today’s exchange rate is estimated to be approximately 87 to 90 cents per Casa Ley CVR.”
After about six weeks from the closing sale date, Albertsons Companies expects the net proceeds to be distributed. It will share the final amount of the distribution when that time comes, and this will be the final distribution in regards to Casa Ley’s CVRs.
The company explains that those holding CVRs for Casa Ley should consult their tax advisors on the tax treatment and any distribution relating to the sale. As reported by Safeway at the time of the merger, the fair market value of each Casa Ley CVR was $1.0149; this amount is based on a third-party’s estimate and was put on Forms 1099-B issued by the paying agent as part of its merger consideration.
The Mexican peso to U.S. dollar exchange rate has fallen by more than 20 percent over the past three years—since Casa Ley CVRs were issued.
Albertsons Companies’ shared in the statement, “Today’s announcement has no effect on the CVRs issued in connection with the merger with respect to the sale of Safeway’s former real estate development subsidiary, Property Development Centers (PDC).”
It will offer more information on the time and distributions of the PDC CVRs as it becomes available.
How will this sale impact the Albertsons Companies, and will we see a ripple effect in the industry at large? AndNowUKnow will keep you up-to-speed with the latest!
