Fleming To Sell 28 California Food4Less Locations to Save Mart

DALLAS - Fleming Cos., which is in the process of selling all of its retail stores, has agreed to sell 28 Food4Less stores in California to Save Mart Supermarkets Inc. for $165 million.

In a press release Wednesday, Fleming said proceeds will be comprised of up to $130 million in cash, including inventory, and a $35 million reduction of long-term liabilities in the form of capital leases.

The purchase price is subject to adjustment based on store sales through closing. The transaction is expected to be finalized within 60 days. Fleming intends to apply the cash proceeds from this transaction to reduce its senior secured term loan balance.

As part of the agreement, Fleming will supply the stores through a five-year supply arrangement with Modesto, Calif.-based Save Mart. The supply agreement is expected to represent about $385 million in annual sales volume the first year and $340 million for each of the remaining four years, making Save Mart Supermarkets one of Fleming's five largest customers. The stores will be supplied by Fleming divisions in Sacramento and Fresno, Calif.

On Sept. 24, Fleming said it was planning to sell its retail operations in order to focus on its distribution business.

Fleming said Wednesday it continues the process of selling its remaining 84 retail locations this quarter and in 2003. The company intends to use the proceeds from these sales to further strengthen its balance sheet by reducing debt.
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