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NEW YORK - Grocery distributor Fleming Cos. Inc. said on Tuesday that the bankruptcy court has conditionally approved $150 million in financing the company needs to reorganize.
The debtor-in-possession, or DIP, financing is subject to final documentation and budgetary approval by Fleming's lenders. The company is currently operating under a $50 million bridge financing commitment.
"The DIP financing -- combined with company cash flow and the anticipated restoration of trade terms -- should provide us with the resources we need to meet our obligations throughout the reorganization process," said Peter Willmott, Fleming's interim president and chief executive.
The motion also approved the creation of a junior trade lien on company assets for use in restoring trade terms from some vendors.
"There are a few things that need to get fixed up in a big hurry," said Richard Hastings, a retail analyst with Bernard Sands. "First is the reliability of its financial reports, which they have started on; other things -- like internal logistics, making sure that the staff is in compliance with regulatory requirements and good operating practices -- will take time to remedy."
Fleming filed for Chapter 11 protection on April 1, shortly after losing a key $4.5 billion contract to supply food to discount retailer Kmart Corp., which is also operating in bankruptcy.
Fleming's secured DIP facility will be used to supplement its existing cash flow during restructuring. The lead lenders in the DIP financing package are Deutsche Bank AG and J.P. Morgan Chase & Co.