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Reeling from a series of corporate problems that ranged from the collapse of its supply agreement with Kmart to ongoing investigations of the company by the US Securities and Exchange Commission (SEC), the board of directors of Fleming Cos. concluded that it had had enough, and asked for and received the resignation of chairman and CEO Mark Hansen.

He is succeeded as CEO on an interim basis by Peter S. Willmott, who also takes the title of President. Willmott is chairman of Willmott Services and has been on Fleming’s board for just three months.

"The company's goals remain focused on cash flow, reducing debt and realigning costs,” Willmott said. “Efforts are underway to realign our expense structure and to strengthen our capital structure."

In other moves, Fleming named Robert Allen to be acting COO of the company; Allen had been the president and CEO of its Core-Mark division, and most recently was Fleming’s Executive Vice President, President and Chief Executive Officer for Convenience Distribution, a role he reportedly intends to maintain.

Archie R. Dykes has been named Fleming’s non-executive Chairman of the Board.

“The Board of Directors concluded that a change in the management of the company is necessary,” said Dykes in a statement. “The Board has great confidence in Pete's leadership and we are fully focused on supporting Pete as we guide the company through this transition and conduct the executive search to put a new Chief Executive Officer in place as promptly as possible.”

Willmott and Allen will direct day-to-day operations of the company while a replacement for Hansen is sought.

Hansen had been chairman and CEO of Fleming since 1998.

Fleming reportedly has a $1.95 billion debt load. Its stock, which closed at $2.12 on the New York Stock Exchange on Monday, is trading at its lowest price in at least two decades.

In addition, it is still in the process of selling off its retail stores, which were being pummeled in many markets by Wal-Mart; is laying of some 1,800 people in a cost-cutting measure; and is trying to build its share of the convenience store distribution business.
KC's View:
Of course, by trying to build its presence in the c-store business, Fleming brings itself right back into more conflict with Wal-Mart, which owns McLane…so that may not be the quickest road to renewed prosperity.

Hansen’s resignation seemed to be in the cards for some time, and the question now would seem to be what other executive changes will take place at Fleming, and what the time line might be.

While the buck starts at Hansen’s desk, serious questions have to be asked about a lot of the decision-making that has been taking place at Fleming HQ. From the beginning of its exclusive supply deal with Kmart, there was debate about whether it made sense. It seemed like Fleming shifted overnight from a decision to expand its retail holdings to a decision to sell them off. And the SEC investigation, which based on recent events elsewhere in the industry will almost certainly highlight accounting problems at the company, will only cap off a disastrous period in the company’s history.

One hears on the grapevine that Fleming is being squeezed by its suppliers to make payments faster than it used to, as manufacturers worry about a company bankruptcy that leaves them exposed. And, of course, rumors about an impending Fleming bankruptcy filing cross our laptop almost every day.

And, on the horizon, there are the rumblings about Wal-Mart possibly increasing its presence in the wholesaling business and distributing to the nation’s independent grocers…which would only serve to put new nails into Fleming’s coffin.

Reuters pointed out an interesting irony this morning. Fleming is being probed for vendor trade practices, which is the same kind of investigation now going on at Ahold, where the CEO also lost his job. Both Ahold and Fleming use auditor Deloitte & Touche.

This story has just begun to unfold. Or unravel...