VILLAGE SUPER MARKET INC 8-K

What Happened

• Village Super Market, Inc. filed an 8-K reporting a New Markets Tax Credit (NMTC) financing transaction on December 19, 2025 to help fund construction and opening costs for a replacement store in East Orange, New Jersey.
• Under the deal, VSM New Markets II LLC (the "Leverage Lender") lent $4.4 million to DV-ShopRite QEI, LLC (the "Investment Fund") at 1.0% interest (maturing Dec 10, 2051, interest-only quarterly beginning March 2026). Valley National Bank Community Investment Fund, LLC ("Valley Bank") contributed $1.9 million to the Investment Fund and receives most of the NMTC tax benefits.
• The Investment Fund invested $6.0 million into a certified community development entity (CDE), which in turn made a loan of $5.6 million (net of issuance costs) to Village Super Market of Brick Church LLC at ~1.24% interest, payable quarterly, maturing Dec 19, 2055.

Key Details

• NMTC basics: program under the Community Renewal Tax Relief Act of 2000 allows tax credits up to 39% of qualified investments; credits are subject to a 7-year recapture risk.
• Related-party: VSM New Markets II LLC is owned 95% by the Company and 5% by CEO John J. Sumas. Mr. Sumas provided a $0.2 million loan to the Leverage Lender via a promissory note (dated Dec 19, 2025) at 7.0% interest, payable quarterly, maturing March 31, 2033. Audit Committee reviewed and approved these related-party terms.
• Put/call: transaction includes a put/call; Company expects Valley Bank will exercise the put in Dec 2032 (end of recapture period), producing an expected pretax benefit of $1.1 million (net of debt issuance costs) to be recognized over the seven-year compliance period in operating and administrative expense.
• Indemnity risk: noncompliance with NMTC rules could trigger 100% recapture during the 7-year period and require the Company to indemnify Valley Bank; the Company does not anticipate recapture.

Why It Matters

• This financing supplies roughly $5.6 million (net) of long-term, low-cost funding to help complete the East Orange replacement store while leveraging NMTC tax incentives. For investors, the arrangement affects the company’s capital structure and upfront project funding with modest interest costs and potential future accounting recognition of a $1.1M pretax benefit.
• The transaction includes related-party lending and an indemnity exposure tied to NMTC compliance; the Company says it expects no recapture and that the Audit Committee approved the arrangements.