CHICAGO – Winn-Dixie Stores Inc., a grocer operating under bankruptcy protection, Thursday said it has filed a proposed reorganization plan with U.S. bankruptcy court and is positioned to emerge from Chapter 11 protection as soon as late October.
Under the proposed plan, Winn-Dixie's current shareholders will not receive any distributions once the company emerges from bankruptcy protection.
Shares of Winn-Dixie fell 40 percent in morning trading.
The company also said it received a commitment for up to $725 million in exit financing from Wachovia Bank.
Winn-Dixie filed for protection from creditors in February 2005, after losing market share to rivals such as Wal-Mart Stores Inc. (WMT) and privately held Publix Super Markets.
Winn-Dixie said it expects to emerge from reorganization with enough financing and liquidity to invest in its stores, selectively open new stores and take other actions to compete in its markets over the next several years.
Jacksonville, Florida-based Winn-Dixie said it filed the proposed plan and disclosure statement with the U.S. Bankruptcy Court for the Middle District of Florida.
Under the proposed plan, substantially all of Winn-Dixie's unsecured liabilities would be discharged in exchange for distribution of common equity in the reorganized company.
Once the reorganization plan becomes effective, a new board would be appointed, initially consisting of nine directors.
Winn-Dixie said its board believes it should retain President and Chief Executive Officer Peter Lynch, under a new employment agreement, to serve in the same roles.
Lynch's current retention agreement expires on Aug. 31, and he has expressed a strong desire to continue in his roles after the company emerges from Chapter 11, Winn-Dixie said. The company's board, the creditors committee and Lynch are negotiating the terms of a new employment agreement.
Shares of Winn-Dixie were down 8 cents at 13.5 cents after falling as low as 12.2 cents in morning trading.
Winn-Dixie said its five-year business plan includes merchandising and marketing initiatives such as a focus on improving its offering of fresh, perishables items and a branding message of "Getting better all the time."
The grocer projected additional growth in revenue, gross margin and earnings before interest, taxes, depreciation and amortization during the five-year period.
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