Winn-Dixie Deal Leaves 'Strong' Balance Sheet: Onstead

MAULDIN, S.C. — The proposed $560 million acquisition of Winn-Dixie Stores by Bi-Lo here, announced Monday, is not a typical leveraged buyout, Randall Onstead, Bi-Lo's chairman, told SN on Monday after the deal was announced.

Although he declined to go into specific detail about the structure of the transaction, he said Bi-Lo would have "strong" balance sheet going forward.

"Bi-Lo doesn't have a lot of debt, but we will be assuming additional debt to do the transaction," Onstead explained. "It's a very appropriate amount, and there will be new equity put into the business as well. It's not a levered transaction as most people would think about one."

Lone Star Funds, the Dallas-based private-equity firm that acquired Bi-Lo in 2005, would remain the owner of the combined companies.

"They are very supportive of this transaction," Onstead said. "Their role has been one of support and will continue to be supportive of the combined company going forward."

Tim Carroll of William Blair & Co., Chicago, which advised on the merger, told SN the transaction would include an asset-based loan and equity, with no new high-yield bond issue to finance the acquisition.

"It's a sizable equity investment," he said. "It's Lone Star's plan to make sure the balance sheet is very, very solid."

The combined companies would have an estimated $10 billion in annual sales. Bi-Lo currently has 207 supermarkets in North Carolina, South Carolina, Georgia and Tennessee, with estimated sales of $2.8 billion in 2011. Winn-Dixie had sales of about $6.88 billion in the fiscal year that ended June 29, 2011.