Winn-Dixie and Tops Owners Are Said to Prepare for Bankruptcy

Two U.S. supermarket bondage are readying failure filings, according to people with believe of a matter, a pointer of a ascent pressures in a grocery industry.

Bi-Lo LLC, a association behind the Winn-Dixie chain, is scheming for a filing as shortly as March, according to a people, who asked not to be identified given a routine isn’t public. The owners of Tops Friendly Markets, meanwhile, could potentially find justice insurance from creditors as shortly as this month, people informed with that conditions said.

With low margins and plenty competition, a grocery business has always been challenging. But now a attention is contending with a some-more assertive pull by big-box retailers and Amazon.com Inc., that acquired Whole Foods final year to give it a incomparable brick-and-mortar presence. The moves threaten to force comparison bondage to possibly connect or revamp their operations.

As partial of a upheaval, Bi-Lo is formulation to close roughly 200 stores — possibly before or after a filing — one chairman said. The business, that went broke in prior incarnations in 2005 and 2009, might still find a approach to restructure a debt out of court.

Bi-Lo is laboring underneath some-more than $1 billion in debt following a 2005 buyout by Lone Star Funds. The association and a creditors have hold talks to plead a probable debt-to-equity swap, as good as alternatives such as item sales, Bloomberg reported final year.

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

Niagara Falls Roots

Tops was founded by Italian newcomer Ferrante Castellani, who non-stop a initial store roughly a century ago in Niagara Falls. The Williamsville, New York-based sequence runs about 170 grocery stores with some-more than 14,000 employees in a Northeast, according to regulatory filings final year.

Buyouts by Morgan Stanley — and after by a company’s possess managers — left Tops straining to keep adult with debt payments. And a industry’s heated foe done it tough to equivalent a weight by lifting prices.

Another blow to sales came when a U.S. supervision cut food-stamp subsidies, whose users minister about 10 percent of annual revenue. Since then, a Trump administration has contemplated even some-more reductions.

Morgan Stanley Private Equity bought Tops from Dutch tradesman Koninklijke Ahold NV in 2007 for $310 million. Tops stretched fast underneath a new owner, from 71 outlets in 2007 to some-more than 150 by 2013, and handling formula primarily improved.

But same-store sales began to stall, and debt was used to assistance financial during slightest $375 million in dividends for a private-equity owners. Management bought out Morgan Stanley in 2013 by another leveraged transaction.

At Bi-Lo, Lone Star piped in $150 million when a grocer exited Chapter 11 a initial time, and invested $275 million to assistance account a squeeze of Winn-Dixie in 2012. But it substantially will still come out ahead, carrying paid itself during slightest $800 million given 2012, along with government fees it’s collected, according to regulatory filings.

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

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