Lone Star Funds to Purchase Bi-Lo and Bruno's

GREENVILLE, S.C. - In a deal that helps Ahold close its "year of transition" in a much better position going forward, it will sell its Bi-Lo and Bruno's chains to investment group Lone Star Funds.

Bi-Lo Holdings, LLC said yesterday that Lone Star will buy Bi-Lo Holdings, LLC, from Netherlands-based Ahold for up to $660 million in cash. Bi-Lo Holdings, LLC, is the parent company of Bi-Lo, LLC and Bruno's Supermarkets, Inc., which together run a total of 455 stores and employ 34,500 associates in seven Southeastern states.

The transaction is expected to close in the first quarter of 2005 and is subject to customary closing conditions, including regulatory approvals. The final purchase price is subject to customary pricing adjustments. The deal was struck after an exhaustive process that has been underway for most of the year. In it, Bi-Lo and Bruno's will retain all of their debt obligations and other liabilities, including capitalized lease obligations, although Ahold may be contingently liable under existing guarantees in respect of a portion of such capitalized lease obligations.

At closing, Ahold will receive cash proceeds of $560 million, and a letter of credit for $100 million will be placed in escrow. Within 18 months of closing, Ahold will be entitled to receive the balance of the purchase price of up to $100 million, depending on Bi-Lo and Bruno's achievement of certain targets relating to dispositions of inventory, real estate, and other assets.

Bi-Lo and Bruno's president and c.e.o. Dean Cohagan said in a statement: "This agreement is a significant vote of confidence in Bi-Lo and Bruno's, and reflects the talents of our associates, the strength of our business, and the depth of the customer relationships we have built over many years. We are looking forward to working with Lone Star, which has the financial skills and strategic resources that can help us continue our long tradition of providing outstanding service to our customers and supporting the communities in which we live and work.

"We will now become a regional supermarket operator -- one that will be fast-moving, flexible, and responsive. We will be a company capable of taking decisive actions based on the needs of our business, our customers, and the competitive dynamics of our local and regional markets. Our goal is to be the best supermarket business in the Southeast," continued Cohagan.

"This divestment comes at the end of a year of transition for Ahold and marks a major milestone along our road to recovery," said Ahold president and c.e.o. Anders Moberg. "Divesting Bi-Lo and Bruno's is part of our strategy to optimize our portfolio and strengthen our financial position by reducing debt. Our U.S. retail business will be fully focused on our other prominent supermarket operations, Stop & Shop/Giant-Landover and Giant-Carlisle/Tops."

Len Allen, e.v.p. of Lone Star U.S., said: "We are excited about our investment in Bi-Lo and Bruno's, and to have the opportunity to participate in their future development. Together with the experienced and talented management team at Bi-Lo and Bruno's, led by Dean Cohagan, we will seek to build on the competitive strengths of the business and position it for long-term success. We are looking forward to continuing the strong tradition of brand leadership that Bi-Lo and Bruno's have established over many decades in their markets."

Dallas-based Lone Star is a private investment company that manages more than $13 billion in assets and investments in North America, Europe, and Asia. Among the businesses run by the company are the Captain D's and Shoney's restaurant chains.

Bi-Lo, based in Mauldin, S.C., operates 287 stores in South Carolina, North Carolina, Georgia, and Tennessee, and employs about 23,000 associates, while Birmingham, Ala.-based Bruno's runs 168 stores in Alabama, Florida, Georgia, and Mississippi, and employs about 11,500 associates. Ahold acquired Bi-Lo in 1977 and Bruno's in 2001.
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