October 13, 2003 (Axcess News) Pleasanton California - Safeway Inc (NYSE: SWY)
Chief Executive Officer, Steven Burd, 53, in what was deemed to be "planned sales", dumped
over $21,400,000 in Safeway shares between September 8 and October 6 at prices ranging
from $23 to $25 a share.
Insider filings showed a rigorous, repeated exercise of stock options during the month leading up to the United Food and Commercial Workers Union, an AFL-CIO affiliate, (UFCW) strike which took place one week after Burd's last sale.
Burd, who had himself not commented on the strike in a press release made by Safeway October 6th, had sold 50,000 shares at $23.1592 a share for $1,157,960 dollars that very day, his last reported sale. Burd had exercised options that same day for 50,000 shares at a cost of $328,125, or $6.56 a share, racking a cool profit of over $829,835 dollars before taxes.
Safeway, one of the largest food and drug retailers in North America, operates 1,702 stores across the USA and Canada employing over 172,000 workers in 2002. Many of which are members of the UFCW and while Burd's company claims insurance costs are too high, wanting the union to give in to passing many of those costs onto workers, some on Wall Street believe there are other motives driving those cost cuts.
In 1986 Safeway was acquired and taken private via a leveraged buyout by partnerships formed by Kohlberg Kravis Roberts & Co (KKR) and Safeway's senior management.
From 1986 through 1988 Safeway closed or sold 1,000 stores and received proceeds of $2.4 billion that were used to retire some of the leveraged debt incurred from the buyout. At year-end 1989, total debt had been reduced to $3.1 billion.
In April 1990, Safeway went public once again, issuing 46 million shares at $2.81 a share, netting the grocer $120 million.
In 1991 SWY issued a secondary public offering of 70 million shares at $5.13 per share which rang up another $340 million.
Then came the KKR years, when rocket fuel debt underwritings were deployed which to this day, after swaps and refinancings, still plague the company. In fact, some of that debt is maturing in 2003 and 2004.
With millions in his pockets and KKR long gone after several more registrations of their shares, Burd now stands in his aisles a confident and very wealthy man, asking his employees to bend on their health insurance using narrow 2% margins, with competitor Wal-Mart as the reason the company can't afford to pay health benefits.
Burd's real worry may be the hangover of debts and swaps with which Safeway is still burdened after an acquisition binge that lasted five years beginning in 1998 when SWY had 1,383 stores that had swelled to 1,695 by 2002.
On October 16th Safeway is slated for an earnings call at 11am eastern time. Analysts, investors, and surely the United Food and Commercial Workers Union will be tuned in to hear those figures and hopefully, some encouraging comments regarding the strike while others will be more interested in the grocers numbers as its debt repayments come due.