Bruno's Inc., a troubled supermarket chain in Birmingham, Ala., said last week it obtained an amendment and waiver of some financial covenants included in its $550 million loan led by Chase Manhattan Corp.
The amendment also waives any defaults of financial covenants that may have arisen through Aug. 2.
The new waiver will let the chain use up to $200 million of the revolving credit portion of its bank facility through July 23, according to documents filed Friday with the Securities and Exchange Commission.
"The banks are continuing to support the company and allowing new management to execute their business plan," said a member of the company's bank group.
Moody's Investors Service lowered the ratings on Bruno's secured bank facility Wednesday, to B3 from B2. The move was prompted by "the continuing steep decline in Bruno's operating profit (before one-time items), as well as the expectation that the turnaround will take longer and prove more challenging than previously expected," according to a Moody's report.
The new credit amendment also provides for relaxed financial covenants during the first half of 1998 and a waiver of certain defaults through July 23.
Bruno's operates 220 grocery stores in Alabama, Georgia, Tennessee, Florida, and Mississippi. The chain was acquired by Kohlberg Kravis Roberts & Co. in a 1995 leveraged buyout valued at $930 million.
- Omri Ben-Amos