BI-LO Files Chapter 11, GE to Provide $100 Million DIP
Tuesday, March 24, 2009
BI-LO, LLC and certain affiliates announced it filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court, District of South Carolina. The company intends to use the court-supervised process to address an upcoming debt maturity. BI-LO expects to reach mutually acceptable resolutions with all of its constituencies and to exit bankruptcy as expeditiously as possible. BI-LO stores will remain open and operations will continue without interruption.
During this period, the company intends to fund operations primarily through its cash on hand and cash generated from operations. To further strengthen its liquidity position, BI-LO has received a commitment for a $100 million debtor-in-possession (DIP) facility arranged by GE Capital. Upon court approval, the financing will be used to support the company's operational cash flow to meet its normal business obligations.
"On an operational level, we are making significant progress this year and we have seen solid sales momentum and strong cash flow," said Michael Byars, president and CEO of BI-LO. "Our strong operations and liquidity position continue to demonstrate the strength of our business model, and the company has continuously satisfied all of its obligations to date, under the term loan and otherwise. In a normal credit environment we would have expected to refinance the maturing term loan on reasonable terms in the ordinary course of business. Unfortunately, the current credit environment is very challenging. After extensive discussions with our lenders and careful consideration of all available alternatives, we determined that in order to maintain business operations and customer service without interruption while we address this debt maturity, a court-supervised restructuring is appropriate. We intend to move through this process as quickly as possible, and we firmly believe that this course of action will better position BI-LO for continued growth and long-term success."
In conjunction with today's filing, BI-LO will seek the court's approval of a number of customary first-day motions designed to support its teammates, customers and suppliers during the reorganization process.
BI-LO has retained William Blair & Co. as financial advisor and Alix Partners for restructuring services. Vinson & Elkins, LLP and Nelson, Mullins, Riley & Scarborough, LLP serve as legal counsel in connection with these restructuring efforts.
Headquartered in Mauldin, SC, BI-LO operates 215 supermarkets in South Carolina, North Carolina, Georgia and Tennessee and employs approximately 15,500 people. The company is owned by private equity investor Lone Star Funds.
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