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According to an internal memo distributed by Fleming Cos. to its employees and obtained by MNB, the bankruptcy court hearing that is slated to result in the sale of Fleming's grocery wholesaler business to C&S Wholesale Grocers is scheduled to conclude today, with C&S already having identified companies to which it will be selling off parts of the company. The memo said:

    Monday's bankruptcy court hearing was held as planned. The parties were unable to complete the full agenda of items to be addressed at the hearing so the judge wrapped up the session Monday evening and scheduled the remainder of the hearing for this Thursday.

    The asset purchase agreement, which covers substantially all of the assets of Fleming's grocery wholesale business, allows C&S to assign its acquisition rights to third parties. At the hearing on Monday, C&S announced tentative plans to assign certain assets to third party wholesalers. Based on the information shared by C&S, certain assets of the following divisions may be acquired by these respective wholesalers:

  • Associated Wholesale Grocers, Inc. (Kansas City): Lincoln, Memphis, Memphis GMD, Nashville, Topeka GMD and Tulsa.

  • Associated Grocers of Florida, Inc.: Miami.

  • Associated Grocers, Inc.: Lafayette.

  • The Grocers Supply Co., Inc.: Garland.

  • C&S also announced its intention to acquire certain assets at the other divisions. It is premature to speculate which of the other Fleming grocery wholesale assets may ultimately be assigned to third parties. Such assignments are contingent on Fleming receiving U.S. Bankruptcy Court approval of the asset purchase agreement, the completion of C&S' negotiations with the third parties, and the satisfaction of closing conditions and regulatory approval.

    Initial closing continues to be anticipated for mid-August of 2003. According to the agreement with C&S, Fleming would continue to support all grocer wholesale customers from open divisions through a transition period that could last for up to six months beyond the initial closing. The agreement with C&S allows C&S to assign assets to designated third parties throughout the transition period.
KC's View:
The question some people will ask is whether instead of just selling out to C&S and letting it sell off divisions, Fleming should have done so itself, and perhaps made more for investors and shareholders in the long run.

Good question.