SEG to File for Bankruptcy, Begin Financial Restructuring
Southeastern Grocers (SEG) has entered into a restructuring support agreement (RSA) with a group of creditors and its private equity sponsor. The agreement establishes the terms of comprehensive financial restructuring in a bid to return the company to financial health. To efficiently carry out the restructuring, the grocer will voluntarily file a pre-packaged plan of reorganization under Chapter 11 of the U. S. Bankruptcy Code by the end of March.
SEG will continue to operate throughout the process, according to the Jacksonville, Fla.-based grocer, which earlier reports indicated would file for Chapter 11 bankruptcy. However, under the terms of the proposed restructuring, 94 stores are slated to close, leaving the company with 582 supermarkets. The affected locations are Bi-Lo, Fresco y Mas, Harveys, and Winn-Dixie stores throughout SEG’s seven-store footprint of Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina and South Carolina. The closing stores’ addresses, as well as information on the company’s restructuring efforts, is available in a special section of SEG's website.
Addressing its customers in that section, the company noted, "It is our goal to work through our financial restructuring as quickly and efficiently as possible, and we will emerge from this process likely within the next 90 days." SEG also referred to a three-year plan to "create stunning, remodeled stores in a significant portion of our footprint."
According to SEG President and CEO Anthony Hucker, "The agreement … is an important step in Southeastern Grocers' transformation to put our company in the best position to succeed in the extremely competitive retail market in which we do business. With a foundation built on iconic, heritage banners, and with the strong support of our leadership team, we will work through this process as quickly and efficiently as possible. We are excited to emerge with the optimal store footprint and greater financial flexibility to invest in Southeastern Grocers' growth.”
The restructuring aims to lower overall debt by more than $500 million and maintain the company's strong liquidity position under a new post-emergence revolving credit facility. The considerably reduced debt should result in less interest expense, enabling SEG to invest more cash flow back into its business as higher cap ex for new stores and those due for renovation.
"Southeastern Grocers is faced with a critical milestone in its transformation, and we have made choices for our future and long-term growth potential,” noted Hucker. “We conducted a thorough review of our strategic options and determined that this financial restructuring is in the best interests of our associates, customers, supplier partners and the communities in which we serve. Southeastern Grocers is a strong, viable business and is building momentum with robust performance and new store concepts that resonate with our associates, customers and communities. This course of action enables us to continue writing the story for our company and our iconic, heritage banners in the Southeast.”
Despite the imminent store closings, he pledged that “SEG is committed to ensuring that all associates continue to be treated with the utmost dignity, respect and compassion.”