Winn-Dixie moving ahead on bankruptcy issues
Winn-Dixie moving ahead on bankruptcy issues
Winn-Dixie, the Florida retailer that filed for bankruptcy protection in February, is working through that process as it has come to terms with some of its major vendors and announced the sale of some of its stores.
On Friday, July 29, the retailer and its major vendors announced a plan that should provide $100 million in liquidity for the chain. The agreement was approved by U.S. district judge handling the process. This new plan frees up credit and gives Winn-Dixie until close to the end of the year to pay vendors for goods and merchandise delivered just prior to the February bankruptcy filing.
The agreement preliminarily settles a reported $129 million in vendor claims. It also allows the firm to develop what it considers to be better credit terms with these same suppliers. The vendors will be paid on a monthly basis until the debt for products delivered in February prior to the bankruptcy filing is paid in full.
Winn-Dixie purchases $1 billion worth of product each year. Prior to the bankruptcy filing, vendors had extended the firm about the same amount of credit that it will now enjoy. Since February, the chain has had to borrow against its open line of credit, paying high interest which was increasing the cost of doing business to what the chain believes was an unacceptable level. Analysts have said that this agreement will go a long way toward moving the company back to the positive side of the ledger.
Meanwhile, the company continues to sell store leases and other assets for stores that it is planning to close. Winn-Dixie is seeking court approval for the sale of 102 stores as it downsizes to fewer than 600 locations in the Southeast and the Bahamas from more than 900 stores when it filed Chapter 11. The firm has received a bid of $45.6 million for those 102 stores from 30 buyers, but it needs court approval to finalize the sale. The stores were bought at auction from a list of 326 locations. A second auction for the 224 unsold units from the first sale is scheduled for Aug. 9.
Analysts, however, have said that more sales are necessary and the chain may have to offer better locations. They are suggesting that Winn-Dixie's strongest stores are in the New Orleans area, where the chain ranks number one in metropolitan New Orleans with 28 percent of the market.
Financial analysts are saying that those properties would most likely draw bids significantly higher than the close to $500,000 per store that Winn-Dixie averaged in its first auction.
On Friday, July 29, the retailer and its major vendors announced a plan that should provide $100 million in liquidity for the chain. The agreement was approved by U.S. district judge handling the process. This new plan frees up credit and gives Winn-Dixie until close to the end of the year to pay vendors for goods and merchandise delivered just prior to the February bankruptcy filing.
The agreement preliminarily settles a reported $129 million in vendor claims. It also allows the firm to develop what it considers to be better credit terms with these same suppliers. The vendors will be paid on a monthly basis until the debt for products delivered in February prior to the bankruptcy filing is paid in full.
Winn-Dixie purchases $1 billion worth of product each year. Prior to the bankruptcy filing, vendors had extended the firm about the same amount of credit that it will now enjoy. Since February, the chain has had to borrow against its open line of credit, paying high interest which was increasing the cost of doing business to what the chain believes was an unacceptable level. Analysts have said that this agreement will go a long way toward moving the company back to the positive side of the ledger.
Meanwhile, the company continues to sell store leases and other assets for stores that it is planning to close. Winn-Dixie is seeking court approval for the sale of 102 stores as it downsizes to fewer than 600 locations in the Southeast and the Bahamas from more than 900 stores when it filed Chapter 11. The firm has received a bid of $45.6 million for those 102 stores from 30 buyers, but it needs court approval to finalize the sale. The stores were bought at auction from a list of 326 locations. A second auction for the 224 unsold units from the first sale is scheduled for Aug. 9.
Analysts, however, have said that more sales are necessary and the chain may have to offer better locations. They are suggesting that Winn-Dixie's strongest stores are in the New Orleans area, where the chain ranks number one in metropolitan New Orleans with 28 percent of the market.
Financial analysts are saying that those properties would most likely draw bids significantly higher than the close to $500,000 per store that Winn-Dixie averaged in its first auction.
