[StBernard] Analysts: Winn-Dixie bankruptcy plans not enough

[Westley Annis]

JACKSONVILLE, Fla. (AP) - Winn-Dixie Stores Inc. said Thursday it has filed
plans to emerge from bankruptcy by the end of October, as the supermarket
chain struggles to boost sales amid tough competition and regain customers. 
 
The Jacksonville-based company, which has about two-thirds as many stores as
it had when it filed for Chapter 11 reorganization in February 2005, will
present the plan to U.S. Bankruptcy Judge Jerry A. Funk at a hearing later
Thursday. 
  
The chain wants Funk to approve the plan Aug. 4 and set in motion the
process to get creditors to accept it. Winn-Dixie attorney Stephen Busey
said it usually takes about 60 days to do that, meaning the chain could have
a confirmation hearing in early October and emerge from bankruptcy later
that month. 
  
The chain said it has agreed with Wachovia Corp. for up to $725 million in
exit financing, so it should emerge from reorganization with sufficient
funding and liquidity to make significant investments in current stores and
to open new stores. The company also expects to have only a minimal amount
of long-term debt. 
  
The company also said it planned to keep Peter Lynch as its president and
chief executive, whose contract ends Aug. 31. In a statement, Lynch said the
company has made "tremendous progress in addressing its operational and
financial challenges." He said this has led to significant increases in
identical store sales in recent months and improving gross margin. 
  
Winn-Dixie cited competitive pressures when it filed for bankruptcy, caught
in the crush between Wal-Mart Stores Inc. and Publix Super Markets Inc. 
The filing came just after Winn-Dixie lost $399 million in its fiscal second
quarter, which led to downgrades from debt rating agencies and a tightening
of credit from vendors. 
  
About 22,000 employees were laid off when the company left a number of large
markets. It has closed or sold about 360 stores in the Southeast and 12
stores in the Bahamas. It also has closed and sold several distribution
centers. 
  
The chain now has 527 supermarkets and about 54,944 employees and operates
stores in Florida, Georgia, Alabama, Mississippi and Louisiana. The company
said store closings and measures to slash overhead led to a $100 million
reduction in annual costs. 
  
But Barton Weitz, executive director of the Miller Center for Retailing at
the University of Florida, doesn't believe Winn-Dixie has improved its
position while under reorganization. 
  
"I don't think there has been a radical change in the quality of service,
merchandise and store atmosphere and environment," he said. "They are in a
difficult position, being caught between Wal-Mart on the low end and Publix,
based on customer service and merchandise." 
  
Winn-Dixie listed assets of $2.2 billion and liabilities of $1.9 billion
when it filed for reorganization. 
  
The plan is bad news for Winn-Dixie's current shareholders, whose stock will
be canceled once the plan of reorganization is approved. The company's
vendors and creditors will become Winn-Dixie's owners. 
  
Once the plan is confirmed, a new board of directors will be appointed to
run the company. 
  
Winn-Dixie's largest shareholder is the Davis family, which founded the
company in 1925 and owns 51.7 million shares, or 36.7 percent of the common
stock. The Davis family holdings were worth about $3.5 billion when the
stock peaked in 1998 and are now worth about $6 million. 
  
Winn-Dixie shares fell 9 cents to 12.5 cents in over-the-counter trading
Thursday.. 
 
****************************************************************************
**********************
 
I know if they open that store on Paris Road as soon as they can, that one
WILL be profitable.  Although, they have Publix stores here in the B'ham
area and they are awfully nice!
JLY