A tentative deal for Food Lion to buy much of competitor Bi-Lo has unraveled.
Bi-Lo, which operates nearly 30 stores in the Chattanooga area, would continue to operate under two newly filed and competing bankruptcy restructuring plans, officials said Monday.
Food Lion spokeswoman Christy Phillips-Brown said her company does not figure into Chapter 11 reorganization plans Bi-Lo filed with the U.S. Bankruptcy Court.
"We had a nonbinding agreement with the debtor to acquire certain assets of Bi-Lo, but this agreement is no longer valid," she said.
The spokeswoman said Food Lion remains "strongly interested" in acquiring Bi-Lo assets if an opportunity arises. She termed the process "highly fluid and complex."
Staff File Photo By Kelly Wegel Bi-Lo employees take a break outside the new Super Bi-Lo on Ooltewah-Ringgold Road. The new store has a wide selection of organic and fresh foods and a more open atmosphere, according to Bi-Lo regional Vice President Dwayne Goodwin.
Michael Byars, chief executive of Greenville, S.C.-based Bi-Lo, said the competing plans demonstrate significant interest in the company and are a testament to its strong operational performance the past several months.
"Today marks a significant milestone and an important next step in our restructuring efforts," he said.
Under a plan sponsored by Bi-Lo owner Lone Star Funds, the grocer would receive a $350 million cash infusion. The cash injection would be funded by a $150 million new equity investment by Lone Star Funds and $200 million in committed term loan financing, according to a filing.
In addition, the Lone Star proposal will provide for $150 million to fund capital and other normal business operations, the filing said.
The company noted that the official unsecured creditors committee has submitted a competing plan of reorganization and disclosure statement with the court. Like the plan sponsored by Lone Star, the proposal submitted by the creditor's committee sees Bi-Lo continuing to operate.
Lorrie Griffith, editor of trade publication The Shelby Report, said Bi-Lo is considering its options.
She said it appears it's "a more palatable option" for Bi-Lo to exist as a standalone company.
"Food Lion and Bi-Lo have been competitors for many years," she said. "It seemed like it would be hard to swallow for Bi-Lo to be put into Food Lion."
In October, Delhaize Group, the Belgian owner of Food Lion, said it had agreed in a nonbinding letter of intent to buy "a substantial majority" of Bi-Lo's assets for $425 million.
Area Bi-Lo stores would have been integrated into Food Lion's network had a federal judge approved the deal, Delhaize said.
Bi-Lo had filed voluntary petitions for bankruptcy relief in March, saying tight credit markets had prevented it from refinancing a loan that was coming due.
Bi-Lo traces its roots to Red Food Stores, which long operated in the area.
Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...