Ahold Requests U.S. Deny Bi-Lo Financing
Dutch supermarket conglomerate Ahold, which operates U.S. grocery chains Stop & Shop/ Giant-Landover and Giant-Carlisle, has filed papers with the U.S. Bankruptcy Court, District of South Carolina to deny bankrupt supermarket retailer Bi-Lo a proposed $100 million financing package.
Bi-Lo, which initially filed for bankruptcy March 24, 2009, said it has received a commitment for a $100 million debtor-in-possession (DIP) facility arranged by GE Capital Financing, which it will use to meet normal business obligations upon court approval. Bi-Lo has also asked for court permission to continue paying employee wages, benefits and salaries without interruption and says it will continue existing customer policies and programs, as well as normal business relationships with suppliers and partners.
According to Supermarket News, Ahold, which sold Bi-Lo to Lone Star Holdings in 2005 and remains a Bi-Lo landlord, said the proposed financing package would unfairly put lenders ahead of landlords with regard to collecting on pre-petition debts. Ahold has proposed its own $35 million loan to Bi-Lo in place of the GE Capital financing.
Bi-Lo operates 215 supermarkets in South Carolina, North Carolina, Georgia and Tennessee. Ahold currently does not operate any stores in these states. However, Publix, who reported a 4% rise in sales during fiscal 2008, operates stores in South Carolina, Georgia and Tennessee. Wal-Mart, which has been expanding its grocery business in recent years, operates supercenters and Sam’s Club discount warehouse club stores in all four states where Bi-Lo operates.
The U.S. Bankruptcy Court is expected to rule on the proposed GE Capital financing deal Friday, April 3. Bi-Lo has also requested the court approve an emergency $21 million payment to C&S Wholesale Grocers, its largest supplier, with funds coming from the financing package.