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Bear Stearns Leads BI-LO Loan

16 Jun 2005

Bear Stearns is leading a five-year, $75 million revolver and a six-year, $345 million term loan "B" for BI-LO Holdings.

Bear Stearns is leading a five-year, $75 million revolver and a six-year, $345 million term loan "B" for BI-LO Holdings. Pricing is LIBOR plus 3 1/4% on both tranches. Based in Greenville, S.C., BI-LO is a regional supermarket chain owned by private equity group, Lone Star Funds.

Standard & Poor's assigned a B rating to the facility, and in its report it said the ratings reflect high leverage, weak operating performance and a short record of operating independently. "Soft consumer spending and increasing competition from both conventional and nontraditional food retailers are pressuring sales and operating margins across the industry," the report stated. The company's sales and EBITDA fell in 2004 and the operating margin was 5.7%.

Proceeds from the facility, along with $150 million equity from Lone Star and $93 million from a sale/leaseback, are being used to refinance bridge financing and provide liquidity. Lone Star bought BI-LO for $567 million in cash along with a $100 million letter of credit in early 2005 from Royal Ahold. A call to Steve Ortega, cfo, was not returned. A spokesman for Lone Star had no comment.

16 Jun 2005