Southeastern Grocers completes restructuring, emerges from bankruptcy

By Caroline Salls

Pittsburgh, May 31 – Southeastern Grocers has successfully completed its financial restructuring and has emerged from Chapter 11 bankruptcy, according to a news release.

Through this process, the company said it has transformed its financial profile and established a strengthened balance sheet by decreasing overall debt levels by about $600 million, including $522 million of debt exchanged for equity in the reorganized company, while maintaining its strong liquidity position.

With a solid financial foundation, Southeastern Grocers said it will further advance its business through store remodels and new stores.

“It is an exciting new day for Southeastern Grocers as we emerge as a stronger company with an optimal store footprint that is well-positioned to thrive in the competitive retail market,” president and chief executive officer Anthony Hucker said in the release.

“With a stronger balance sheet, we will continually improve the shopping experience for our customers and communities, including nearly 100 store remodels and new store concepts just this year.”

The company said it will operate more than 575 stores under the BI-LO, Fresco y Más, Harveys Supermarket and Winn-Dixie banners.

Plan terms

On March 15, Southeastern announced that it had entered into a restructuring support agreement with a group of creditors collectively holding 80% of its 8 5/8%/9 3/8% senior PIK toggle notes due September 2018 and its private equity sponsor regarding the terms of a comprehensive financial restructuring.

Under the terms of the restructuring, outstanding secured debt obligations, including Southeastern’s secured notes and 2014 revolving credit facility, will be paid in full.

The unsecured notes will be cancelled in exchange for 100% of equity in the reorganized company.

Holders of general unsecured claims, including supplier partners, contract counterparties and all other trade creditors will receive payment in full on account of existing obligations in the ordinary course of business.

The holder of the company’s existing equity will receive a five-year warrant and specified global settlement consideration.

Exit financing commitment

Southeastern said in March that it 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.

The commitment parties are Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., SunTrust Bank, SunTrust Robinson Humphrey, Inc., Royal Bank of Canada, RBC Capital Markets, Bank of America, NA and Merrill Lynch, Pierce, Fenner & Smith Inc.

Interest on the ABL facility will range from Libor plus 125 basis points to Libor plus 175 bps, based on excess availability, and the ABL facility will terminate on Aug. 12.

The exit term loan will mature six years from closing and will accrue interest at Libor plus 750 bps.

Weil, Gotshal & Manges LLP served as legal counsel, Evercore served as investment banker, and FTI Consulting Inc. served as restructuring adviser to Southeastern Grocers.

Jacksonville, Fla.-based Southeastern Grocers is parent company and home of BI-LO, Fresco y Más, Harveys Supermarket and Winn-Dixie grocery stores. The company filed bankruptcy on March 27 under Chapter 11 case number 18-10700.

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