Southeastern Grocers is restructuring to save $500 million, but will be forced to file bankruptcy and close 94 stores.
The Jacksonville, Fla.-based company said it is voluntarily choosing to “implement a court-supervised, prepackaged restructuring agreement” that will ultimately see it filing for Chapter 11 bankruptcy protection by the end of March.
In order to reduce its debt by nearly a half-billion dollars, the company says it has made the “difficult but necessary decision” to close 94 stores.
Dozens of stores will be closed in South Carolina, Alabama, Georgia and North Carolina, along with a few stores in Mississippi and Louisiana, 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 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,” said SEG President and CEO Anthony Hucker.
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.”
Southeastern Grocers had about 50,000 employees as of February.
In February, SEG sold 15 of its southeast stores to Brookshire Grocery and Baton Rouge-based grocery chain Shoppers Value. The stores will close and reopen under the new labels.
Late last year, Southeastern Grocers, hired investment bank Evercore to advise it on a debt restructuring, a move that came a few months after CEO Ian McLeod resigned and was replaced with former Chief Operating Officer Anthony Hucker — the company third CEO in a decade.