For more retail coverage, click GlobeSt.com/RETAIL.

ZAANDAM, THE NETHERLANDS-Ahold is selling two of its US retailfood subsidiaries for as much as $660 million as part of an ongoingrepositioning to "optimize" its portfolio and reduce debt. Thelocally headquartered company said today it reached an agreement tosell BI-LO and Bruno's, two of the top food chains in theSoutheastern US, to an affiliate of Dallas-based Lone Star Funds.BI-LO, headquartered in Mauldin, SC, operates 287 stores in SouthCarolina, North Carolina, Georgia and Tennessee, and hasapproximately 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 StarFunds is private investment company that manages about $13 billionin assets and investments in North America, Europe and Asia. Atclosing, expected during the first quarter of 2005, Ahold willreceive cash proceeds of $560 million, with a letter of credit foran additional $100 million placed in escrow. Ahold will be entitledto receive all, some or none of the additional $100 million within18 months depending upon BI-LO and Bruno's achieving certaintargets relating to dispositions of inventory, real estate andother assets, according to the announcement. As part of theagreement, BI-LO and Bruno's will retain all of their debtobligations and other liabilities including capitalized leaseobligations; however, Ahold may be contingently liable underexisting guarantees for a portion of said capitalized leaseobligations. Ahold president/CEO Anders Moberg says the divestitureis part of a strategy "to optimize our portfolio and strengthen ourfinancial position by reducing debt." Ahold's US retail businessnow "will be fully focused on our other prominent supermarketoperations, Stop & Shop/Giant-Landover andGiant-Carlisle/Tops," Moberg says in a prepared statement. "Our'Road to Recovery' is on track," he concludes. The goal of Ahold'sRoad to Recovery strategy, initiated last year, has been to raiseby the end of 2005 at least 2.5 billion euros ($3.8 billion) ofproceeds from the disposition of non-core businesses orunder-performing assets--and reduce indebtedness by the sameamount. As part of that plan, Ahold in 2003 sold operations inChile, Peru, Paraguay, Malaysia and Indonesia, as well as GoldenGallon in the US and Jamin, De Tuinen and De Walvis in theNetherlands. It also divested two shopping centers in the CzechRepublic and entered into an agreement to sell two hypermarkets inPoland. In early 2004, Ahold sold its Brazilian retail chainBompreco and credit card operation Hipercard, as well as itsinterest in CRC Ahold in Thailand. Last month, Ahold announced ithas reached agreement on the divestment of its 13 largehypermarkets in Poland to Carrefour. Earlier this month, Aholdcompleted the sale of its Spanish retail activities (600 stores) tothe Permira Funds. Still up for sale, according to the company'sstrategy, are its Tops convenience stores in the US, as well as G.Barbosa in Brazil and its Benelux foodservice unit, Deli XL.