Winn-Dixie Files for Protection From Creditors

Supermarket giant Winn-Dixie Stores Inc., which has struggled to compete with Wal-Mart Stores Inc. and other grocery chains in the Southeast, said Tuesday that it had filed for bankruptcy protection from its creditors while it reorganized its finances.

The filing came less than two weeks after Winn-Dixie reported a wider loss and lower revenue compared with a year earlier.

Winn-Dixie and 23 of its U.S. subsidiaries filed to reorganize under Chapter 11 of the Bankruptcy Code late Monday in U.S. Bankruptcy Court for the Southern District of New York.

The Jacksonville, Fla.-based company also announced Tuesday that it had secured $800 million in credit from Wachovia Bank to help pay for its reorganization. The new credit amount, subject to court approval, replaces the company’s previous $600-million credit line.

The company said all 920 Winn-Dixie stores in eight states mostly in the Southeast and the Bahamas were open. It has about 79,000 employees, including 33,000 who work full time.

Winn-Dixie’s shares closed Friday at $1.47 on the New York Stock Exchange and were suspended from trading on Tuesday.

The company plans to use the reorganization process to improve its operations and financial performance but also to reduce its expenses and decide how to use its assets to make its stores more productive.

“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. The former Albertsons Inc. executive was hired in December to turn around Winn-Dixie.

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

Winn-Dixie, one of the largest food retailers in the nation, recently reported a loss of $399.7 million, or $2.84 a share, for the three months ended Jan. 12, compared with a loss of $79.5 million, or 57 cents, for the same quarter last year. Second-quarter revenue fell to $3.08 billion from $3.23 billion.

Excluding $258 million in restructuring and income tax charges and $72.2 million in expenses related to discontinued operations, the company lost $69.4 million, or 50 cents a share -- exceeding the 11-cent-a-share loss that analysts surveyed by Thomson First Call expected.

The company said its problematic second quarter led to “subsequent credit downgrades from the major debt rating agencies” and “a tightening of trade credit from some of its vendors, which further reduced its cash availability.”