US supermarket group Winn-Dixie Stores has filed its proposed Plan of Reorganisation and related Disclosure Statement with the US Bankruptcy Court for the Middle District of Florida which positions the company to emerge from Chapter 11 bankruptcy protection as soon as late-October.
The company expects to emerge from its reorganisation with only a minimal amount of long-term debt on its balance sheet. It also said it expects to emerge from Chapter 11 with sufficient financing and liquidity to make significant investments in its current store portfolio, open some new stores, and to take other actions to develop the business to compete effectively in its markets over the next few years.
Winn-Dixie, which is based in Jackonsville, Florida and operates 527 stores across five southern states and in the Bahamas, said it had received a commitment for up to US$725m in exit financing from Wachovia Bank, subject to customary conditions. The exit financing, which will replace the company’s current debtor-in-possession (DIP) credit facility on the effective date of a Plan of Reorganisation, will increase Winn-Dixie’s cash availability substantially, the company said.
The Winn-Dixie board has also confirmed that Peter Lynch is to remain as president and CEO following emergence from Chapter 11. The board, Creditors Committee and Lynch are currently negotiating the terms of a new employment agreement as his current retention agreement expires on 31 August, 2006.
“The filing of the Plan of Reorganisation and Disclosure Statement represents an important milestone in our Chapter 11 cases,” said Lynch. “We are hopeful that all parties involved in our Chapter 11 cases will agree that this plan represents an appropriate resolution of a variety of complex issues, including potential disputes regarding substantive consolidation.”
The Disclosure Statement includes details of Winn-Dixie’s five-year business plan, which is designed “to position the company to compete successfully by delivering high-quality products and customer service with competitive pricing”.
The plan includes actions the company has already taken to enhance its operational and financial performance, such as merchandising and marketing initiatives, a reduction of the store footprint to focus on regions where Winn-Dixie’s market share and profitability provide the best foundation for growth, a major redesign of the field and corporate overhead structure, and an annual cost reduction of approximately $100m.
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