Staff Report
Published Nov. 23, 2009

Mauldin-based Bi-Lo LLC has filed its plan for reorganization with the U.S. Bankruptcy Court. The plan is sponsored by parent company Lone Star Funds and includes a $350 million cash infusion, funded by a $150 million new equity investment by Lone Star and $200 million in committed term loan financing.

In addition, the Lone Star proposal will provide for a $150 million asset-based post-emergence lending facility for Bi-Lo to fund working capital and other normal business needs.

“Today marks a significant milestone and an important next step in our restructuring efforts,” said Michael Byars, president and CEO of Bi-Lo. “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. Further, the competing plans demonstrate the significant interest in our company and are a testament to our strong operational performance over the past several months.”

Previous coverage:

• Food Lion seeks to buy Bi-Lo stores
• Bi-Lo receives commitment of $125M
• Court allows Bi-Lo to continue operations
• $260 million loan pushed Bi-Lo into Chapter 11 bankruptcy

In October, Delhaize Group, the Belgian parent company of Food Lion, signed a letter of intent in October to purchase certain Bi-Lo assets for $425 million and integrate them into the Food Lion brand. Since then, however, a judge has denied the company’s request for exclusivity, preventing Delhaize from filing a reorganization plan for Bi-Lo.

“Frankly, I think that letter of intent has gone by the wayside,” said Bi-Lo attorney George Cauthen of Nelson Mullins Riley & Scarborough LLP in Columbia.

“There’s a potential, but there’s a potential for anything right now,” he added of the chance Delhaize could still purchase Bi-Lo. “There is a chance. Am I prepared to rate those chances? No, I am not.”

On Friday, Food Lion informed the court it had hired Greenville lawyer Beattie Ashmore to make a court appearance on its behalf. Food Lion spokeswoman Christy Phillips-Brown said Delhaize remains “strongly interested” in acquiring Bi-Lo and said she could not comment further.

Bi-Lo’s creditors, meanwhile, were granted co-exclusivity along with Bi-Lo. The two reorganization plans were due Friday.

“I’d like to thank all of our teammates for their continued hard work, dedication and commitment to Bi-Lo,” Byars said. “We look forward to working with all of our creditors and the court to reach an agreement that will enable us to emerge from this process as expeditiously as possible. As we work toward a successful restructuring, we will continue to provide our customers and communities with the freshest products and the same top-quality brands they have come to expect.”