Loans tied to Save A Lot Inc. tumbled toward new lows amid talks about a restructuring that will give lenders control of the discount grocer and cut its debt by almost half, Bloomberg News reported. Save A Lot, backed by private equity firm Onex Corp., is seeking a deal with lenders that would keep it out of bankruptcy. If enough of those creditors don’t sign up, the company could opt for a pre-negotiated bankruptcy filing. In either scenario, Onex would give up its equity stake or be diluted in a debt-for-equity swap. The company’s $740 million first-lien loan fell to a bid-ask spread of 15 cents to 25 cents on the dollar Friday. About two-thirds of lenders agreed to defer taking action after Save A Lot missed a Dec. 31 principal payment on its loan, according to a company statement. Some have already agreed to provide $138 million of new capital to support operations as the grocer focuses on its turnaround plan. The chain had more than $820 million of net debt outstanding, comprised primarily of the loan due in 2023, and $24 million of cash as of June.
