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DALLAS - Fleming Companies Inc. on Tuesday announced the company has completed the sale of 17 Food4Less locations to Save Mart Supermarkets, for cash proceeds of approximately $82 million, of which approximately $9 million was received in the fourth quarter of 2002. Fleming said it intends to apply the cash proceeds from this transaction to reduce the company's senior secured term loan balance. The transaction also reduces Fleming's capital lease obligations by approximately $20 million.
The company is supplying these Save Mart locations through Fleming's Divisions in Sacramento and Fresno, California. Save Mart has hired substantially all of the store associates in the acquired locations.
As previously announced, Save Mart Supermarkets has agreed to purchase another 11 Fleming-owned Food4Less locations in California. The sale of two of the locations, which are under construction, is anticipated to be final this quarter. The sale of the other nine stores is subject to review by the Federal Trade Commission.
Fleming said it continues to pursue the divestiture of its remaining retail locations. The company anticipates that proceeds from the sale of the remaining stores would be used to further strengthen Fleming's balance sheet by reducing debt.
"Once we complete our retail sales, Fleming will become the only pure-play wholesale distribution company with a national footprint," said Mark Hansen, Fleming chairman and CEO. "Exiting retail means we will not be competing with our important retail distribution customers for shoppers' dollars, which is an important value proposition to many retailers in today's competitive retail environment."
In other Fleming news, on Friday the company announced that it has entered into an agreement with ConocoPhillips to supply 114 Conoco-branded convenience stores in five states. The agreement anticipates approximately $35 million in annual volume and commences in April of 2003.
The stores will be supplied by Fleming's Denver, Albuquerque, Salt Lake City and Ft. Worth divisions. Fleming currently supplies more than 700 stores for ConocoPhillips through an existing, multi-year agreement, which will include these additional 114 locations. Fleming also provides third-party operations for ConocoPhillip's Circle K business, serving more than 500 Circle K stores from Phoenix.
"This agreement is another example of the additional growth opportunities for Fleming in the convenience sector," said Mike Walsh, executive VP of sales, Fleming Convenience. "We believe that this contract is a strong testament to our overall business strategy, our decision to fully focus on our wholesale distribution business and the advantage that we have to attract customers that know we do not compete with them for retail products or fuel."