Stater Bros. ups bond issuance by $10 million
Just days after detailing a $275 million bond issuance plan to cover old debt, fund construction and pay out dividends, Colton-based grocery chain owner Stater Bros. Holdings Inc. Tuesday increased the amount of the issuance to $285 million.
Company officials cited strong demand for the issuance as the reason for the increase. The bonds were issued through Banc America Securities, the investment banking subsidiary of Bank of America.
The privately held Stater Bros. Holdings, which owns the Stater Bros. market chain, did not detail how the addition $10 million would be used. The chain pulled in more than $3 billion in 2006 sales and $26 million in profits.
The firm, which recently signed a labor deal with unions ahead of upcoming negotiations with other major chains, said in a release that $175 million of bond money would go to paying down bond debt, and nearly $100 million would help to finance construction of a new distribution center in Southern California.
An additional $15 million would go towards buying back common stock and $5 million would be used to pay a dividend to the company's sole shareholder Colton-based La Cadena Investments.
Jack Brown, Stater Bros. Holdings Inc. chairman and chief executive officer, is the sole owner of La Cadena Investments. Despite company executives claiming last year that no dividend to La Cadena was planned for this year this is the second paid out in as many years, according to the Riverside Press Enterprise.
Stater Bros., which operates 162 grocery stores in Southern California, is seeking to modernize the company's distribution, cut costs and consolidate eight area facilities by building the new 2.5-million-square-foot center. Located about 60 miles east of Los Angeles in San Bernardino, the new center will house offices and warehousing. Costs for the center have swelled from just over $200 million at the groundbreaking in early 2005 to more than $295 million today. The center is expected to be complete in the summer of 2008.