Jacksonville-based Southeastern Grocers, parent of Winn-Dixie and three other supermarket chains, said Thursday it has an agreement with creditors to restructure its debt through a prepackaged Chapter 11 bankruptcy filing.
The agreement will give unsecured note holders ownership of the company by canceling the notes and exchanging them for equity in the company.
The company currently is controlled by private equity firm Lone Star Funds. A company news release said the “holder” of its existing equity would receive a “five-year warrant and certain global settlement consideration,” without giving more details or naming Lone Star.
Under the plan, Southeastern will continue operating 582 stores, but close 94. Southeast operates stores under the Winn-Dixie, Harveys Supermarkets, Fresco Y Mas and Bi-Lo banners.
Spokesman Joe Caldwell said the stores will close on or before April 30.
Four of the stores closing are in Northeast Florida. In Jacksonville, the store closings will be the Winn-Dixie at 9866 Baymeadows Road and the Harveys Supermarkets at 1012 Edgewood Ave. N. and 3000 Dunn Ave. In Orange Park, the Winn-Dixie at 248 Blanding Blvd. is closing.
The company did not say how many jobs would be cut.
”Any decision that impacts our associates is made only after careful consideration. We are incredibly sensitive to the impact being felt by our associates and we will continue to support them through this transition,” Caldwell said.
“The total number of affected associates is still being worked through as we make out best efforts to transition associates from closing stores to open positions at nearby stores,” he said.
Southeastern said it will file its Chapter 11 petitions in U.S. Bankruptcy Court for the District of Delaware by the end of March. It expects to emerge out of bankruptcy within 90 days.
The firm of Weil, Gotshal & Manges LLP is serving as Southeastern’s legal counsel, while Morrison & Foerster LLP is counsel for the noteholders.
Southeastern did not say how much debt is involved but ratings agency Moody’s Investors Service said in November the company had $900 million in debt coming due in the next two years.
Southeastern did say the restructuring will reduce its overall debt by more than $500 million.
The company said it expects to pay general unsecured claims in full. Southeastern said it has secured $525 million in exit financing.
Speculation about a bankruptcy filing has been ongoing for several months since Moody’s and several news reports highlighted the company’s debt issues.
“Southeastern Grocers is faced with a critical milestone in its transformation and we have made choices for our future and long-term growth potential,” CEO Anthony Hucker said in a news release Thursday.
“We conducted a thorough review of our strategic options and determined that this financial restructuring is in the best interests of our associates, customers, supplier partners and the communities in which we serve.”
The company will close 30 Winn-Dixie stores, four Harveys and one Fresco Y Mas in Florida.
The closings also include a number of Bi-Lo stores, mainly in North and South Carolina, and other stores under the four banners in Georgia, Louisiana and Mississippi.
“We expect our financial health and free cash flow to improve in the newly reorganized company, and although the restructuring contemplates certain store closings, SEG is committed to ensuring that all associates continue to be treated with the utmost dignity, respect and compassion,” Hucker said.