USA – Bi-Lo LLC, a supermarket chain owned by Southeastern Grocers, is said to be preparing to file for a potential bankruptcy next month- according to sources familiar with the matter, named by a Bloomberg report.
According to the report, the owner of grocery stores and in-store pharmacies said that it was planning to shut down about 200 stores as part of the bankruptcy move.
For Bi-Lo, the retail chain has been quite challenging with low margins due to tough market, price wars and rise of e-commerce.
The grocery market is dominated with aggressive stores like Amazon and Walmart, prompting other chains like Kroger’s to make major investments into e-commerce.
Competition from well placed, bigger retailers like Amazon, which has acquired Whole Foods has put itself at a better position against other players in the industry.
In 2005 and 2009, Bi-Lo sought court protection to restructure its debt out of court, something that the court granted.
BI-LO purchased Winn-Dixie for USD$530 million in a merger to create an organization with some 690 grocery stores USD$530 million, with an agreement to operate Winn-Dixie as a subsidiary with its stores maintaining the Winn-Dixie name.
The company’s financial hard times also involve more than US$1 billion in debt following its 2005 buyout by Lone Star Funds, and according to Bloomberg, they have been talking with creditors for about a year now, hoping for a debt-to-equity swap, as well as alternatives such as asset sales.
Lone Star has been on the forefront when it comes to Bi-Lo’s matters, having helped it with US$150 million to help revive Bi-Lo after the court proceedings during the 2005 bankruptcy.
According to Bloomberg report, potential default puts some 50,000 jobs at Bi-Lo, Winn-Dixie and Harveys at stake.
Back in November, Mickey Chadha, VP at Moody’s said that the company needed to address the unsecured debt of the holding company first, and also there was need to restructure its capital position overall.