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NEW YORK - Fleming chairman and chief executive Mark Hansen told employees in a Thursday memo that its depressed stock price does not reflect its current status of business, Dow Jones Newswires reports.
"Frankly, the current status of our business is strong and, therefore, our depressed stock price is not reflecting our strengths," Hansen stated in the memo, adding that Fleming is "not dependent upon any single channel of distribution, or any single customer, customer category or format for our long- term success."
The memo, which was also sent to Dow Jones, may have been a response to a news report Wednesday that expressed doubts about Fleming's relationship with its largest customer, Kmart Corp. James B. Adamson, Kmart's chairman and chief executive, told The New York Times that Kmart "will take a look at our relationship with Fleming and our whole relationship with food."
Hansen added in his memo that Fleming continues to anticipate proceeds in excess of $450 million net of taxes from the sale of its 110-store grocery retailing operation.
"We continue to enjoy strong relationships with both our customers and vendors," the memo said. "We are confident that our decision to sell our retail operations -- which will put us in a position so that we will no longer be competing with our distribution customers -- will only further strengthen customer relationships."
Fleming will use the proceeds of the sale to further pay down its debt, which totals nearly $2 billion. Fleming has no significant debt maturities due until 2007, Hansen noted.
"If we continue to focus on our business -- and continue to work closely with our vendors and customers -- the stock will take care of itself, and investors will be rewarded for their faith and patience," the memo concluded.