Banks in Talks on Grocery Buyout

Freeman Spogli & Co. expects to raise up to $150 million in senior debt to help finance its latest supermarket acquisition.

Brad Freeman, general partner of the Los Angeles merchant banking firm, said preliminary talks have already been held with Bankers Trust Co. and Union Bank of Switzerland.

On Tuesday, Freeman Spogli announced that it agreed to buy the Purity Supreme operations of Supermarkets General Holdings Corp. for about $300 million, including the assumption of debt.

In a telephone interview, Mr. Freeman said the deal would be financed with a combination of equity, subordinated debt, and senior debt.

He said the exact financing structure was still "up in the air." However, the senior debt portion, which could involve both notes and bank loans, will probably account for $100 million to $150 million of the total financing.

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