Bi-Lo works to reinvent itself

GREENVILLE -- Bi-Lo's challenge under its recently approved bankruptcy reorganization is learning to better compete against other grocery chain and big-box stores.

Marianne Bickle, who chairs USC's department of retailing, said she believes Bi-Lo can succeed.

"I would encourage any company, not just Bi-Lo, but any company, to constantly look at how they can reinvent themselves, especially if they're coming back from some really difficult years," Bickle said. "Maybe they shouldn't be a Publix. Maybe they shouldn't make themselves look like a Walmart, inside the Walmart or inside the Target. This is a wonderful opportunity for Bi-Lo to be something brand new."

Burdened by debt and facing fierce competition and tense negotiations with creditors, Bi-Lo soon will emerge from bankruptcy proceedings "financially stronger, with less debt, and as a more competitive company in the marketplace," said Michael Byars, Bi-Lo's president and chief executive officer.

Bi-Lo's plan calls for the Mauldin-based company to keep the bulk of its stores, which would be good news for its 15,000 employees. The company has about 15 stores in the Charleston area.

For shoppers, a reorganized Bi-Lo would operate more than 200 supermarkets in the Southeast and continue its relationships with vendors and landlords "in substantially the same manner" as the company did before it filed under Chapter 11 last year, according to court filings.

Bi-Lo said its projections call for 207 stores in South Carolina, North Carolina, Georgia and Tennessee. Under the company's amended plan, filed after Bi-Lo's creditors withdrew a competing proposal, Lone Star, a Dallas-based private equity firm, would retain ownership of the grocery chain.

Bi-Lo's reorganization calls for $150 million of new equity from a Lone Star affiliate, a new $200 million term loan to Bi-Lo from Credit Suisse and a $150 million asset-based loan from GE, according to court filings and Bi-Lo's attorneys.

The attorneys said proceeds from the equity infusion and the term loan will be used to pay off a $260 million term loan held by Ahold, Bi-Lo's former owner. Unsecured creditors will divide $40 million.

Among the witnesses during a hearing in Columbia last week was Tim Carroll of William Blair & Co., the grocer's financial adviser.

Carroll said Bi-Lo has increased sales under the five-year business plan the company adopted last year, and he expects its financial performance to continue to improve. Court records show Bi-Lo lost $406,000 in March, down from a $4.7 million loss a year earlier. For the year, Bi-Lo has lost $9.5 million, though sales have risen 3.9 percent to $600.3 million.