Restructuring & Reorganization
Selected Transactions

February 2005

Company Description
Founded in 1925, Winn-Dixie Stores, Inc. (“Winn-Dixie” or the “Company”) is one of the largest food retailers in the United States, with more than 500 stores located in Alabama, Florida, Georgia, Louisiana and Mississippi.

Situation Overview
Winn-Dixie was the dominant grocery chain in the southeastern United States for several decades.  However, a number of factors contributed to a gradual decline of the Company’s market share and its operating performance.  Some of these factors included competition from upstart supermarket operators and non-traditional grocery retailers, inconsistent merchandise offerings and customer service, an aging store base in need of capital improvements, ongoing cash obligations related to closed store leases and unsuccessful acquisitions of smaller grocery chains.

After reporting disappointing quarterly results on February 10, 2005, Winn-Dixie was downgraded by Moody’s Investor Services and Standard & Poor’s Rating Services.  Trade vendors subsequently began to demand shorter payment terms.  Faced with a potential liquidity crisis, Winn-Dixie concluded that the interests of its creditors, employees and customers would be best served through a Chapter 11 reorganization.  The Company filed for Chapter 11 protection on February 21, 2005.

Transaction Summary
Blackstone was retained as Winn-Dixie’s financial advisor and was involved in all significant reorganization issues.  After the Company’s filing, Blackstone led the effort to secure an $800 million DIP facility to address Winn-Dixie’s immediate liquidity needs.  Blackstone also coordinated meetings with the various creditors involved in the reorganization and participated in critical vendor negotiations that ultimately provided the Company with significant post-petition trade credit.

Over the ensuing months, Blackstone assisted management in the development of a comprehensive business plan based on a smaller operating footprint of profitable core markets.  The business plan identified strategic initiatives to improve the Company’s operations and allocated capital for store remodels.  Blackstone also completed the sale of numerous assets, including domestic non-core stores, certain manufacturing assets and the Company’s Bahamian operations.  These asset sales improved Winn-Dixie’s liquidity and enabled management to focus on the Company’s core markets.

Blackstone assumed a leadership role in negotiations related to the plan of reorganization.  These negotiations covered a wide range of topics and lasted for several months.   Blackstone’s analytical work in the areas of substantive consolidation and valuation were particularly important in reaching a consensual plan.  During plan negotiations, Blackstone also managed the exit financing process, meeting with representatives of financial institutions to discuss the Company’s business plan and to negotiate specific financing terms.  This competitive process, in which over a dozen banks submitted proposals, ultimately concluded with the Company selecting a $725 million senior secured facility from Wachovia.  Blackstone provided expert witness testimony concerning the exit facility selection process and the terms of the facility.  Finally, at Winn-Dixie’s confirmation hearing, Blackstone provided expert witness testimony concerning a number of issues, including the feasibility of Winn-Dixie’s business plan, substantive consolidation and valuation.

Winn-Dixie successfully emerged from Chapter 11 protection in November 2006, and its stock now trades on the NASDAQ under the ticker symbol WINN.  In 2007, the Turnaround Management Association named Winn-Dixie the winner of its “Mega Company Turnaround of the Year” award.

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