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ZAANDAM, THE NETHERLANDS-Ahold is selling two of its US retail food subsidiaries for as much as $660 million as part of an ongoing repositioning to "optimize" its portfolio and reduce debt. The locally headquartered company said today it reached an agreement to sell BI-LO and Bruno's, two of the top food chains in the Southeastern US, to an affiliate of Dallas-based Lone Star Funds. BI-LO, headquartered in Mauldin, SC, operates 287 stores in South Carolina, North Carolina, Georgia and Tennessee, and has approximately 23,000 employees. Bruno's, based in Birmingham, AL, operates 168 stores in Alabama, Florida, Georgia and Mississippi, and employs approximately 11,500 individuals. The two chains' combined 2003 net sales were approximately $6.3 billion. Lone Star Funds is private investment company that manages about $13 billion in assets and investments in North America, Europe and Asia. At closing, expected during the first quarter of 2005, Ahold will receive cash proceeds of $560 million, with a letter of credit for an additional $100 million placed in escrow. Ahold will be entitled to receive all, some or none of the additional $100 million within 18 months depending upon BI-LO and Bruno's achieving certain targets relating to dispositions of inventory, real estate and other assets, according to the announcement. As part of the agreement, BI-LO and Bruno's will retain all of their debt obligations and other liabilities including capitalized lease obligations; however, Ahold may be contingently liable under existing guarantees for a portion of said capitalized lease obligations. Ahold president/CEO Anders Moberg says the divestiture is part of a strategy "to optimize our portfolio and strengthen our financial position by reducing debt." Ahold's US retail business now "will be fully focused on our other prominent supermarket operations, Stop & Shop/Giant-Landover and Giant-Carlisle/Tops," Moberg says in a prepared statement. "Our 'Road to Recovery' is on track," he concludes. The goal of Ahold's Road to Recovery strategy, initiated last year, has been to raise by the end of 2005 at least 2.5 billion euros ($3.8 billion) of proceeds from the disposition of non-core businesses or under-performing assets--and reduce indebtedness by the same amount. As part of that plan, Ahold in 2003 sold operations in Chile, Peru, Paraguay, Malaysia and Indonesia, as well as Golden Gallon in the US and Jamin, De Tuinen and De Walvis in the Netherlands. It also divested two shopping centers in the Czech Republic and entered into an agreement to sell two hypermarkets in Poland. In early 2004, Ahold sold its Brazilian retail chain Bompreco and credit card operation Hipercard, as well as its interest in CRC Ahold in Thailand. Last month, Ahold announced it has reached agreement on the divestment of its 13 large hypermarkets in Poland to Carrefour. Earlier this month, Ahold completed the sale of its Spanish retail activities (600 stores) to the Permira Funds. Still up for sale, according to the company's strategy, are its Tops convenience stores in the US, as well as G. Barbosa in Brazil and its Benelux foodservice unit, Deli XL.