Plans filed to restructure Bi-Lo

Food Lion might not gobble up financially troubled Bi-Lo after all.

Competing restructuring plans filed with the U.S. Bankruptcy Court by Mauldin-based Bi-Lo and a committee of unsecured creditors leave Food Lion out of any reorganization scenarios.

Early last month, Belgium-based Delhaize Group, which owns Food Lion, signed a nonbinding letter of intent to acquire most of Bi-Lo's 214 supermarkets in the Southeast. Bi-Lo filed for bankruptcy protection in March after it was unable to refinance or repay a $260 million loan that was due.

Under Bi-Lo's plan, current owner Lone Star Funds would provide a $350 million cash infusion to repay the grocer's debt. The other proposal calls for the creditors' committee of mostly food vendors to receive 43 percent of Bi-Lo's stock for the first $100 million of the unpaid $260 million loan. The rest would be converted into promissory notes, and a different private equity firm would be the lead investor.

Bi-Lo said its plan includes a $150 million new equity investment by Lone Star and $200 million in committed term financing. In addition, Bi-Lo said the Lone Star proposal will provide a $150 million asset-backed loan for Bi-Lo after it emerges from bankruptcy to fund working capital and other normal business needs.

Both plans would allow Bi-Lo to continue to operate as a going concern, Bi-Lo said in a statement.

"Today marks a significant milestone and an important next step in our restructuring efforts," Michael Byars, Bi-Lo's president and chief executive officer, said in a statement. "The two plans submitted before the court create additional choice for Bi-Lo's creditors and encourage competition that we expect will maximize the value of the estate for the benefit of the company and its stakeholders."

The proposed buyout of Bi-Lo would have eliminated a major rival in the competitive grocery business in the Charleston region, where the Upstate chain operates 15 stores. Food Lion has about 18 supermarkets in the three-county area.

Food Lion said through a spokeswoman that it is not part of the Bi-Lo reorganization plan and that its nonbinding agreement to buy the stores is no longer valid following a recent court ruling.

"We remain strongly interested in acquiring certain Bi-Lo assets if an opportunity to purchase assets becomes available as part of the process, which continues to be highly fluid and complex," Food Lion spokeswoman Christy Phillips-Brown said. "We are currently reviewing our options."

The bankruptcy court will hear objections to both plans in late December. It is possible Bi-Lo could emerge from bankruptcy during the first quarter of 2010, a Lone Star spokesman said.

Reach Warren Wise at 937-5524 or wwise@postandcourier.com.