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US supermarket chain Southeastern Grocers begins restructuring process

Published 27 March 2018

Southeastern Grocers (SEG) has started previously announced restructuring with 100% support of creditors and interest holders that have voted.

The company started voluntary cases under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware to implement the pre-packaged plan of reorganization.

As SEG announced on March 15, 2018, SEG entered into an RSA with a group of creditors collectively holding 80% of its 8.625%/9.375% Senior PIK Toggle Notes due September 2018 and its private equity sponsor regarding the terms of a comprehensive financial restructuring that will position SEG for long-term financial health.

SEG will continue operating throughout this process, and its associates remain focused on exceeding the needs of customers and consistently delivering great service, quality and value in SEG's stores.

SEG president and CEO Anthony Hucker said: "Today, with the support of our key stakeholders, we are taking the next step in the implementation of our financial restructuring plan.

“This pre-packaged, court-supervised financial restructuring process provides for a clear and expedited path to put SEG in the best position to serve our communities and succeed in the competitive retail market in which we do business."

Hucker continued: "Our operations will continue to thrive throughout the seven states we serve with more than 580 stores operating under the BI-LO, Fresco y Más, Harveys Supermarket and Winn-Dixie banners.

Source: Company Press Release

“We are extremely pleased that this process continues to proceed quickly and as planned. With each key milestone reached, we move closer to emerging and making Southeastern Grocers into a true success story for our associates, our customers and the communities we serve."

As previously announced, the restructuring process is expected to significantly strengthen SEG's balance sheet. The restructuring will decrease overall debt levels by over $500 million and maintain the Company's strong liquidity position under the new post-emergence Revolving Credit Facility.

The significant reduction in debt will result in reduced interest expense, allowing SEG to invest more cash flow back into the business in the form of increased capital expenditures for store remodels and new stores.

With a deleveraged balance sheet and an optimal store base, SEG will be able to focus its resources on store growth and financial vitality.

Holders of general unsecured claims, including supplier partners, contract counterparties, and all other trade creditors will receive payment in full on account of existing obligations in the ordinary course of business.

SEG has secured 100% committed exit financing in the form of a senior secured six-year term loan facility in the original principal amount of $525 million and an asset-based lending (ABL) revolving credit facility.

SEG has filed a number of customary motions seeking court authorization to continue to support its business operations during the court-supervised restructuring process, including the continued payment of associate wages and benefits without interruption. SEG expects to receive court approval for all of these requests.