Winn-Dixie Owner Bi-Lo Is Said to Prepare for Bankruptcy Filing

(Bloomberg) -- Bi-Lo LLC, the supermarket company that owns the Winn-Dixie chain, is preparing for a potential bankruptcy filing as soon as next month, according to people with knowledge of the matter.

The retailer is planning to shut almost 200 stores as part of the move -- either before or after the filing -- said one of the people, who asked not to be identified because the process isn’t public. The business, which went bankrupt in previous incarnations in 2005 and 2009, may still find a way to restructure its debt out of court.

With low margins and ample competition, the grocery business has always been challenging. But now the industry is contending with a more aggressive push by big-box retailers and Amazon.com Inc., which acquired Whole Foods last year to give it a larger brick-and-mortar presence. The moves threaten to force older chains to either consolidate or revamp their operations.

Bi-Lo is laboring under more than $1 billion in debt following its 2005 buyout by Lone Star Funds. The company and its creditors have held talks to discuss a possible debt-to-equity swap, as well as alternatives such as asset sales, Bloomberg reported last year.

Lone Star declined to comment. A representative for Bi-Lo parent company Southeastern Grocers didn’t immediately respond to a request for comment.

Lone Star piped in $150 million when the grocer exited Chapter 11 the first time, and invested $275 million to help fund the purchase of Winn-Dixie in 2012. But it probably will still come out ahead, having paid itself at least $800 million since 2012, along with management fees it’s collected, according to regulatory filings.

Southeastern Grocers, based in Jacksonville, Florida, says it’s the fifth-largest supermarket chain, with more than 700 stores and 50,000 employees. It also operates the Harveys and Fresco y Mas chains.

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