Recommended: Dallas Firm Pays Itself $800M As Struggling Grocery Chain Nears Default

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Speculation abounded Friday, Nov. 10, that Southeastern Grocers, the fifth-largest conventional supermarket in the U.S., could be facing a Chapter 11 bankruptcy filing. The company employs more than 50,000 associates who serve customers in grocery stores, liquor stores and in-store pharmacies throughout the seven southeastern states of Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina and South Carolina.

Shed no tears for Lone Star Funds, the Dallas private equity firm that invested about $150 million in a buyout of the Bi-Lo grocery chain in 2005.

By some accounts, Bi-Lo is close to default, putting in jeopardy about $1 billion of debt and 50,000 jobs at Winn-Dixie, Harveys, Fresco y Mas and its namesake stores. But Lone Star has already come out ahead, even after committing more capital. The firm has paid itself at least $800 million since 2012, regulatory filings show, and collected still more in management fees.

Lone Star has supplied additional capital to Bi-Lo over the years, according to regulatory filings. Bi-Lo filed for bankruptcy in 2009, wiping out the buyout firm’s equity, and Lone Star kicked in $150 million when the grocer exited Chapter 11. In 2012, Lone Star invested $275 million to help fund the purchase of Winn-Dixie…

So far, Lone Star has shown no willingness to chip in more capital as it talks to creditors, according to people with knowledge of the discussions who asked for anonymity because the talks are private.

The supermarket chain’s bondholders are considering a debt-swap proposal that would give them Bi-Lo ownership stakes. Bi-Lo is mulling whether to execute that swap out of court or in court as part of a Chapter 11 process, the people said.


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A word nerd, grocery geek and three-year member of The Shelby Report. She is a proud new homeowner and a great lover of avocado toast.