Albertsons Companies IncACI had a lawsuit filed against it by Washington State Attorney General Bob Ferguson to stop the grocery chain from paying shareholder dividends.
Albertsons had sought to pay $4 billion in dividends to its shareholders before the closing of its proposed merger with supermarket operator Kroger Co KR.
Ferguson argued that the special dividend payment risked severely undercutting the grocery giant’s ability to compete during the lengthy period.
According to Securities & Exchange Commission filings, this $4 billion dividend exceeds Albertsons’ cash on hand.
The grocery company plans to borrow the rest of the money required for paying its shareholders on November 7.
Albertsons and Kroger account for the vast majority of grocery stores in Washington, with 216 Safeway and Albertsons stores in the state and 114 Kroger-owned Fred Meyer and QFC stores.
The Attorney General will file a temporary restraining order on Tuesday or Wednesday, which, if granted, will block Albertsons from making the payment while Ferguson’s lawsuit is ongoing.
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