Winn-Dixie announces bankruptcy reorganization after losses; stock plummets

Tuesday, February 22nd 2005, 10:46 am
By: News On 6

JACKSONVILLE, Fla. (AP) _ Supermarket giant Winn-Dixie Stores Inc., which has struggled to compete in the Southeast with Wal-Mart Supercenters and other grocery chains, said Tuesday it has filed for bankruptcy reorganization. Its stock price plunged to less than $1 a share.

The filing came less than two weeks after Winn-Dixie reported decreased revenues and increased losses from a year ago.

Winn-Dixie and 23 of its U.S. subsidiaries filed for Chapter 11 reorganization late Monday in U.S. Bankruptcy Court, the company said.

The Jacksonville-based company also announced Tuesday that it has secured $800 million in credit from Wachovia Bank N.A. to help pay for its reorganization. That credit, subject to court approval, replaces the company's previous $600 million credit line.

Winn-Dixie's shares fell 67 cents, or 45.6 percent, to 80 cents a share in pre-market trading Tuesday. Its 52-week high was $8.42 per share. In May 2002, the company shares were trading at $19.41 a share.

The company plans to use the reorganization to improve operations, reduce expenses and make its stores more productive, the release said.

``This includes achieving significant cost reductions, improving the merchandising and customer service in all locations and generating a sense of excitement in the stores,'' said Peter Lynch, president and chief executive officer.

The company said 920 Winn-Dixie stores in eight southeastern states and the Bahamas remain open.

But Winn-Dixie said it will seek court approval to terminate the leases of two warehouses and about 150 stores that were closed previously, for an annual cash savings of approximately $60 million. It also plans to sell all of its remaining manufacturing operations, the company said.

For the first six months of this fiscal year, Winn-Dixie reported sales of $5.41 billion on a net loss of $552.8 million or $3.93 per share, compared with sales of $5.65 billion on a net loss of $78.3 million or 56 cents per share, for the same period in 2004.

Both Standard & Poor's Rating Services and Moody's Investor Services have lowered Winn-Dixie's credit ratings. In early December, Winn-Dixie was dropped from the Standard & Poor's 500 index after recording the worst performance in 2003 in the select stock index.