South Carolina retailer Bi-Lo has rejected a US$425m offer made last month by rival southeastern grocer Food Lion despite filing for bankruptcy in March, according to a report by Progressive Grocer.
The plan, sponsored by Food Lion’s owner, Dallas-based private equity firm Lone Star Funds, reportedly included a US$350m cash infusion, funded by a US$150m new equity investment by Lone Star and US$200m in committed term loan financing.
Additionally, the plan would have provided US$150m to fund working capital and other business requirements after Bi-Lo’s emergence from bankruptcy.
A competing plan submitted by unsecured creditors, under which ownership of the grocer would be taken over by investors affiliated with the company’s lenders, and Lone Star would lose its stake, also envisions the Bi-Lo’s continuation as a stand-alone company, the report said.
Bi-Lo, which declared Chapter 11 bankruptcy in March, currently operates 214 stores and employs about 15,000 people in South Carolina, North Carolina, Georgia and Tennessee.
A key hearing in the case is scheduled to take place late next month, perhaps clearing the way for the company to emerge from bankruptcy as soon as early 2010.
The filings represent “a significant milestone and an important next step in our restructuring efforts,” said Bi-Lo president and CEO Michael Byars. “The two plans submitted before the court create additional choice for Bi-Lo’s creditors and encourage competition that we expect will maximize the value of the estate for the benefit of the company and its stakeholders.”
Mr Byars added that the food retailer hoped to reach an agreement with its creditors and the court “that will enable `it` to emerge from this process as expeditiously as possible.”
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