Southeastern Grocers (SEG), parent company of Winn Dixie and Harvey’s Supermarket, among other brands, began its previously announced restructuring plan and filed Chapter 11 with the U.S. Bankruptcy Court for the District of Delaware to implement the pre-packaged plan of reorganization.
SEG entered into an RSA with a group of creditors collectively holding 80% of its 8.625%/9.375% senior PIK toggle notes due September 2018 and its private equity sponsor regarding the terms of a comprehensive financial restructuring that will position SEG for long-term financial health. SEG will continue operating throughout this process.
Anthony Hucker, president and CEO of SEG, said, “Today, with the support of our key stakeholders, we are taking the next step in the implementation of our financial restructuring plan. This pre-packaged, court-supervised financial restructuring process provides for a clear and expedited path to put SEG in the best position to serve our communities and succeed in the competitive retail market in which we do business.”
The restructuring process is expected to significantly strengthen SEG’s balance sheet. The restructuring will decrease overall debt levels by over $500 million and maintain the company’s strong liquidity position under the new post-emergence revolving credit facility. The significant reduction in debt will result in reduced interest expense, allowing SEG to invest more cash flow back into the business in the form of increased capital expenditures for store remodels and new stores. With a deleveraged balance sheet and an optimal store base, SEG will be able to focus its resources on store growth and financial vitality.
Holders of general unsecured claims, including supplier partners, contract counter-parties, and all other trade creditors, will receive payment in full on account of existing obligations in the ordinary course of business. SEG has secured 100% committed exit financing in the form of a senior secured six-year term loan facility in the original principal amount of $525 million and an asset-based lending revolving credit facility.
According to documents filed with the court, Deutsche Bank is lead arranger for the term loan facility and SunTrust Bank is administrative agent for the ABL facility.
Weil, Gotshal & Manges is serving as legal counsel, Evercore is serving as investment banker and FTI Consulting is serving as restructuring advisor to Southeastern Grocers.
