All 920 Stores Open For Business
Company Obtains $800 Million Dip Financing Commitment From Wachovia Bank
JACKSONVILLE, Fla., Feb. 22 /PRNewswire-FirstCall/ -- Winn-Dixie Stores,
Inc. (NYSE: WIN) announced today that, in order to address the financial and
operational challenges that have hampered its performance, the Company and 23
of its U.S. subsidiaries have filed voluntary petitions for reorganization
under Chapter 11 of the U.S. Bankruptcy Code. The filings were made in the
evening of February 21 in the U.S. Bankruptcy Court for the Southern District
of New York.
All 920 Winn-Dixie stores in eight states and the Bahamas are open and
serving customers. The Company's Customer Reward Card is being honored as
usual and all other customer programs and policies, including those pertaining
to coupons, gift cards and refunds, remain in effect.
Winn-Dixie intends to use the reorganization process to take additional
action to improve its operations and financial performance and strengthen its
business. The Company is moving forward with new sales and merchandising
initiatives to improve its customers' shopping experience and help drive sales
growth across its chain. In addition, as part of its Chapter 11 restructuring,
the Company will implement further asset rationalization, additional asset
sales and expense reduction plans to enhance productivity and take best
advantage of its asset base. The Company is also taking steps to substantially
reduce its lease obligations on previously closed stores.
To fund its continuing operations during the restructuring, Winn-Dixie has
secured an $800 million debtor-in-possession (DIP) financing facility from
Wachovia Bank, N.A. Subject to court approval, the DIP credit facility, which
replaces the Company's previous $600 million credit line, will be used to
supplement the Company's cash flow during the reorganization process.
Following the recent announcement of Winn-Dixie's second quarter financial
results, in which the Company reported increased losses and reduced liquidity,
coupled with subsequent credit downgrades from the major debt rating agencies,
Winn-Dixie experienced a tightening of trade credit from some of its vendors,
which further reduced its cash availability. As a result, the Company
concluded, after consultation with its advisors, that its interests and the
interests of its creditors, associates, customers, and the communities in
which it operates will be best served by continuing its turnaround by
reorganizing under Chapter 11 of the Bankruptcy Code.
Peter Lynch, President and Chief Executive Officer of Winn-Dixie, said:
"We intend to use this reorganization process to take the actions necessary to
position Winn-Dixie for future success. This includes achieving significant
cost reductions, improving the merchandising and customer service in all
locations and generating a sense of excitement in the stores. We deeply regret
any adverse impact the Chapter 11 filing may have on our associates, vendors,
shareholders and business partners. However, having spent the last two months
taking an in-depth look at the Company and visiting over 50 stores across our
chain, I am convinced that the Chapter 11 process will give us the opportunity
we need to restructure our finances, strengthen our business performance and
achieve a sustained turnaround at Winn-Dixie."
Mr. Lynch continued, "We will focus on increasing sales quickly and cost-
effectively across the chain by improving the execution of merchandising and
sales-focused initiatives, reinvigorating the Company's store associates, and
restoring a sales-driven culture across the organization. These plans include
enhancing Winn-Dixie's perishables offerings and other product merchandising,
as well as implementing store sales competitions and other initiatives to
motivate associates to drive sales."
In addition, Mr. Lynch said, Winn-Dixie intends to:
-- Evaluate the performance of every store and the terms of every lease in
the Company's real estate portfolio with the objective of achieving a
rationalized store "footprint" that allows the Company to operate
profitably and increase cash flow and return on invested capital;
-- Seek Bankruptcy Court approval to immediately terminate the leases of
two warehouses and approximately 150 stores that were closed
previously, resulting in an annual cash savings of approximately $60
million; and
-- Pursue all opportunities to further reduce annual expenses and to sell
non-core assets, including all remaining manufacturing operations.
No final decisions regarding any additional store closings or market
departures, beyond those previously announced by the Company, have been made
at this time. The Company will announce any such decisions at a later date.
Winn-Dixie has filed more than 25 "First Day Motions" in the Bankruptcy
Court in New York to support its associates and vendors, together with its
customers and other stakeholders. The court filings include requests to ensure
that the Company will not have any interruption in maintaining the freshest
products in its stores, honor its advertised and Customer Rewards Card
specials, and ensure no disruption in its interaction with customers.
Company associates are being paid in the usual manner and their health and
welfare benefits are expected to continue without disruption. The Company's
401(k) profit sharing plan is maintained independently of the Company and is
protected under federal law. The plan will continue to be administered as
usual.
In its most recent quarterly report on Form 10-Q, Winn-Dixie reported
total assets of $2.2 billion and total liabilities of $1.9 billion, on a
consolidated basis, as of January 12, 2005. The Company's subsidiary in the
Bahamas was not included in the Chapter 11 filing and is operating as normal.
WIN General Insurance, Inc., the Company's captive insurance entity, also was
not included in the filing.
Winn-Dixie's legal advisors are Skadden, Arps, Slate, Meagher & Flom LLP
and King & Spalding LLP. The Company's financial advisors are XRoads Solutions
Group LLC and The Blackstone Group LP.
More information about Winn-Dixie's reorganization case is available on
the Company's Web site at http://www.winn-dixie.com or as follows: Customers:
1-866-WINN-DIXIE (1-866-946-6349), Media: Kekst and Company -- Wendi Kopsick,
(212) 521-4867, Caroline Gentile, (212) 521-4883, or Michael Freitag, (212)
521-4896. Investors: 212-521-4835.
About Winn-Dixie
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.
There can be no assurance that the Company's restructuring will be
successful. Risk factors related to its restructuring efforts that could
cause actual results to differ from these forward-looking statements include,
but are not limited to, the following: the Company's ability to continue as a
going concern; the Company's ability to obtain court approval for its DIP
facility; court approval of the Company's first day papers or other motions
filed with the bankruptcy court from time to time; the ability of the Company
to operate under the terms of the Company's DIP facility; the ability of the
Company to develop, confirm and consummate plans of reorganization; risks
associated with third parties seeking and obtaining court approval to
terminate or shorten plans of reorganization, for the appointment of 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 ability of the Company to obtain and maintain trade credit and
shipments and terms with vendors and service providers for current and future
orders and to maintain in-stock positions for all of its product offerings;
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.
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 execute its strategic initiatives, including asset rationalization,
store upgrades, expense reduction, brand positioning and customer service, and
to fund its store upgrades and brand positioning initiatives; the Company's
ability to increase sales and market share through the brand-related
initiatives being tested in the Company's lead markets; the Company's ability
to increase capital spending levels in the future to invest in its store base
and other capital projects; the Company's ability to manage its inventory
efficiently; and the Company's response to the entry of new competitors in 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.
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 30, 2004, the Quarterly Report on Form 10-Q for the quarter ended January
12, 2005, 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.
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SOURCE Winn-Dixie Stores, Inc.,
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Related links:
http://www.winn-dixie.com
CONTACT:
Investors, +1-212-521-4835, or Media: Wendi
Kopsick, +1-212-521-4867, or Caroline Gentile, +1-212-521-4883,
or Michael Freitag, +1-212-521-4896, all of Kekst and Company,
for Winn-Dixie Stores, Inc.
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