BI-LO and creditor groups file competing reorganization plans

By Caroline Salls

Pittsburgh, Nov. 23 - BI-LO, LLC and its official committee of unsecured creditors and informal committee of term lenders filed competing plans of reorganization and related disclosure statements for the company's bankruptcy case Friday with the U.S. Bankruptcy Court for the District of South Carolina.

According to a company news release, BI-LO's plan is sponsored by Lone Star Funds and includes a $350 million cash infusion, funded by a $150 million new equity investment by Lone Star and $200 million in committed term loan financing.

In addition, the Lone Star proposal will provide for a $150 million ABL facility for BI-LO post-emergence to fund working capital and other normal business needs.

"Today marks a significant milestone and an important next step in our restructuring efforts," BI-LO president and chief executive officer Michael Byars said in the release.

"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.

"Further, the competing plans demonstrate the significant interest in our company and are a testament to our strong operational performance over the past several months."

Company plan terms

Treatment of creditors under the company's plan will include:

• Holders of administrative claims and priority claims will recover 100% in cash;

• Holders of debtor-in-possession facility claims will be paid in full in cash and all letters of credit issued under the DIP loan will either be returned to the issuer undrawn and cancelled or collateralized either in cash or a back-to-back letter of credit in an amount equal to 105% of the face amount;

• Holders of secured claims will either have their claims reinstated, be paid in full in cash or receive the collateral securing their claims, at the reorganized company's option;

• Holders of term lender claims will receive a share of $260 million in cash and will retain all "adequate

protection" payments made by the company before the equipment date, as well as equipment proceeds;

• Holders of general unsecured claims will receive a share of trust assets, including $30 million in cash and the irrevocable assignment of trust causes of action;

• Holders of convenience claims will recover 95% in cash out of an unsecured creditors' fund;

• Subsidiary equity interests will be reinstated; and

• Holders of equity interests will receive no distribution.

Creditor plan details

Under the committee and lender group's plan, the company's non-contingent funded debt would be reduced by more than $120 million through the conversion of a significant portion of the term lenders' claims into equity and the investment of $79.5 million in new equity capital in the reorganized company.

The new investors are led by WCM-BL Holding, LLC and BILO Recovery, LLC, both affiliates of some of the term lenders.

The plan also gives the reorganized company access to an up to $125 million of exit financing via a revolving credit facility.

BI-LO's unsecured creditors would be paid through a creditors' trust, which will be funded with $30 million in cash and receive the proceeds from potential causes of action.

Treatment of creditors will include:

• Holders of priority claims will recover 100% in cash;

• Holders of secured claims will either have their claims reinstated, be paid in full in cash or receive the collateral securing their claims, at the reorganized company's option;

• Holders of term lender claims will receive a share of $164.1 million in new term notes and 43.1% of the new common stock. These creditors would also receive additional cash and additional equity if they choose to participate in a term lender liquidity right and a term lender investment right;

• Holders of general unsecured claims will receive a share of trust recoveries;

• Holders of convenience claims will recover 25% in cash;

• Intercompany claims and subsidiary equity interests will be reinstated; and

• Holders of section 510(b) claims and old equity interests will receive no distribution.

Extension request

In addition, BI-LO asked the court to extend the exclusive period for the company and the committee to file a plan of reorganization and solicit votes on the plan to Feb. 28 from Nov. 20 and Jan. 19, respectively.

The company said it was seeking the extension to move toward confirmation of its plan "without undue interference."

BI-LO also said the time table for confirmation of the plan is too short, as the exclusivity is scheduled to expire on Jan. 19, but the hearing on the disclosure statements is scheduled for Dec. 28.

BI-LO, a Greenville, S.C., supermarket operator, filed for bankruptcy on March 23, 2009. The Chapter 11 case number is 09-02140.

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