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Winn-Dixie Subsidiary Reaches Agreement to Sell Bahamas Operation to Local Company.

All 12 Stores in Bahamas Expected to Remain Open After Sale

JACKSONVILLE, Fla., March 30 /PRNewswire-FirstCall/ -- Winn-Dixie Stores, Inc. today announced plans to sell the 12 supermarkets it operates in the Bahamas -- 9 under the City Markets banner and 3 under the Winn-Dixie banner. All 12 stores are expected to remain open following completion of the transaction.

Winn-Dixie President and Chief Executive Officer Peter Lynch said, "We have concluded that a sale of our Bahamian operation is in the company's best interest as we continue to sharpen our focus on successfully implementing our business plan and preparing to emerge from Chapter 11. Although the 12 stores in the Bahamas are profitable, they are not a core business for us. The additional liquidity generated from this sale will help Winn-Dixie support the remodeling of existing stores and development of new stores in our core U.S. markets. We are pleased that a local Bahamian company recognizes the value of the Bahamian stores and the Associates working in them."

A wholly-owned subsidiary of Winn-Dixie, W-D (Bahamas) Ltd., a Bahamas Company ("W-D (Bahamas)"), has reached a definitive agreement to sell its majority stake in Bahamas Supermarkets Limited ("BSL") to a local Bahamian company, BK Foods, Ltd., for approximately $50 million. BSL owns the 12 Bahamian supermarkets operated under the City Markets and Winn-Dixie banners. The agreement provides an opportunity for the submission of higher or better offers through an auction to be held at a later date.

Jerome Fitzgerald, Director of BK Foods, said, "My partners and I are pleased to have been able to successfully conclude this phase of the transaction. Bahamas Supermarkets Limited has had a long history of success and profitability, and our group fully expects that success to continue with the same management team overseeing day-to-day operations at the company and the same Associates in the stores. We believe this is a good opportunity that puts the retail food business in the Bahamas completely in the hands of Bahamians."

Mark Finlayson, another Director of BK Foods, added, "We are excited about this chapter in the retail food market and look forward to continuing the excellent tradition Winn-Dixie is leaving here in the Bahamas."

Under the terms of the agreement, subject to the outcome of the auction, W-D (Bahamas) will sell all of its shares of the common stock of BSL for 50 million Bahamian dollars (approximately $50 million). W-D (Bahamas) owns approximately 78% of the common stock of BSL. The other 22 percent of BSL's common stock will remain publicly traded in the Bahamas.

The agreement is subject to conditions, including Winn-Dixie obtaining Bankruptcy Court authority to exercise its consent to execution of the transaction by W-D (Bahamas), which is not a debtor under Winn-Dixie's Chapter 11 proceedings. In addition, subject to obtaining Bankruptcy Court authority, Winn-Dixie has agreed (i) to enter into a transition services agreement that provides for an orderly transfer of management and operational know-how regarding the operation of the Bahamian business, and (ii) to enter into a Non-Compete Agreement for a period of two years. The agreement does not include rights to use any Winn-Dixie trade name or trademark, all of which will be removed from the stores in the Bahamas within six months of closing of the transaction.

Upon completion of this transaction, Winn-Dixie will operate 538 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi (including 10 that are temporarily closed as a result of Hurricane Katrina). A list of these stores is available at http://www.winn-dixie.com/ .

Winn-Dixie Stores, Inc. is one of the nation's largest food retailers. Founded in 1925, the company is headquartered in Jacksonville, FL. For more information, please visit http://www.winn-dixie.com/ .

Forward-Looking Statements

Certain statements made in this press release may constitute "forward- looking statements" within the meaning of the federal securities laws. These forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from the expected results described in the forward-looking statements. These forward-looking statements include and may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes," or "intends" and similar words and phrases. There are a number of factors that could cause the Company's actual results to differ materially from the expected results described in the Company's forward-looking statements, particularly while the Chapter 11 cases are proceeding.

There can be no assurance that the Company's Chapter 11 reorganization process will be successful. Risk factors related to its efforts include, but are not limited to, the following: the Company's ability to continue as a going concern and to generate positive cash flow from operations; the ability of the Company to resume vendor credit and accounts receivable collection; the ability of the Company to respond to any further unexpected developments that require the usage of a substantial amount of its liquidity; the ability of the Company to operate under the terms of the DIP credit facility; the Company's ability to obtain court approval with respect to various motions filed with the bankruptcy court from time to time in the Chapter 11 proceedings; the Company's ability to achieve remaining key elements of its restructuring plan, including the rejection of unsold facilities' leases and appropriate alignment of administrative expenses to the resulting organization; the ability of the Company to develop, confirm and consummate a plan or plans of reorganization; risks associated with third parties seeking and obtaining court approval to terminate or shorten the period in which we have the exclusive right to file plans of reorganization, modify or terminate the automatic stay, appoint a Chapter 11 trustee or to convert the cases to Chapter 7 cases; the potential adverse impact of the Chapter 11 cases on the Company's liquidity and results of operations; the Company's ability to maintain contracts that are critical to its operations; the ability of the Company to attract and retain customers; the ability of the Company to attract, motivate and retain key executives and associates; and potential adverse publicity.

The Company experienced a disruption to its business as a result of the 2005 hurricane season and faces a number of risks associated with recovery from those hurricanes including but not limited to the following: the Company's ability to collect on its insurance coverage for damage resulting from the hurricanes; the Company's ability to reopen stores impacted by the hurricanes; future sales levels in the Company's stores in the New Orleans market.

In addition, the Company faces a number of risks with respect to its continuing business operations, including, but not limited to: the Company's ability to increase sales and market share, particularly considering that it has experienced over two years of sustained sales declines; the Company's ability to increase capital expenditures in the future to invest in its store base and other capital projects; the Company's response to the entry of new competitors into its markets, including traditional grocery store openings and the entry of non-traditional grocery retailers such as mass merchandisers, supercenters, warehouse club stores, dollar-discount stores, drug stores and conventional department stores; the Company's ability to reduce the level of operating losses experienced in recent years; the Company's ability to upgrade its information systems and implement new technology and business processes; the Company's ability to implement new customer service programs; the Company's ability to implement effective pricing and promotional programs; the Company's ability to reserve appropriately for self insurance liabilities; the Company's ability to maintain appropriate sanitation and quality standards in its stores and products; the Company's ability to resolve certain class action lawsuits successfully; the success of the Customer Reward Card program; changes in federal, state or local laws or regulations; general economic conditions in our operating regions; lack of inflation in food prices and narrow profit margins that characterize the retail food industry; stability of product costs; increases in labor and employee benefit costs, such as health care and pension expenses; changes in accounting standards, taxation requirements and bankruptcy laws.

Completion of the proposed sale of W-D (Bahamas)'s shares of BSL is subject to risks and uncertainties, including but not limited to approval of the Bankruptcy Court and the satisfaction of other conditions to the sale.

Please refer to discussions of these and other factors in this news release, in the Company's Annual Report on Form 10-K for the fiscal year ended June 29, 2005, the Quarterly Report on Form 10-Q for the quarter ended January 11, 2006, and other Company filings with the Securities and Exchange Commission. These statements are based on current expectations and speak only as of the date of such statements. The Company undertakes no obligation to publicly revise or update these forward-looking statements, whether as a result of new information, future events or otherwise.

Under the priority scheme established by the Bankruptcy Code, generally post-petition liabilities and pre-petition liabilities must be satisfied before shareholders are entitled to receive any distribution. The ultimate recovery by creditors and shareholders, if any, will not be determined until confirmation and implementation of a plan of reorganization. No assurance can be given as to what recoveries, if any, will be assigned in the bankruptcy proceedings to each of these constituencies. A plan of reorganization could result in holders of the Company's stock receiving no value for their interests and holders of its unsecured debt receiving less, and potentially substantially less, than payment in full for their claims. Because of such possibilities, the value of the Company's common stock and unsecured debt is highly speculative.

CONTACT: Investors, +1-212-521-4835, or Media, Michael Freitag, Kekst and Company, +1-212-521-4896, for Winn-Dixie Stores, Inc.

Web site: http://www.winn-dixie.com/
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Publication:PR Newswire
Geographic Code:1USA
Date:Mar 30, 2006
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