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    Fleming Resumes Shipments to Kmart

    DALLAS - Fleming announced on Thursday that it has been named a "critical vendor" to Kmart by the U.S. Bankruptcy Court and that $76 million of Fleming's pre-petition merchandise receivables claim will be paid by Kmart today.

    DALLAS - Fleming announced on Thursday that it has been named a "critical vendor" to Kmart by the U.S. Bankruptcy Court and that $76 million of Fleming's pre-petition merchandise receivables claim will be paid by Kmart today.

    "The U.S. Bankruptcy Court's ruling that named Fleming a critical vendor and approved Kmart's interim debtor-in-possession financing, combined with the court-approved payment of the $76 million, give us satisfactory assurance of Kmart's performance," said Bill Marquard, executive vice president of Fleming. "Consequently, we have resumed shipping food and other consumable products to all Kmart stores, effective immediately, under the trade terms of our existing agreement. Inventory bound for Kmart's more than 2,100 stores began leaving our warehouses yesterday." Fleming has worked closely with Kmart to develop a restart plan to replenish food and consumable products to the Kmart stores.

    Fleming will extend trade credit to Kmart on its weekly payment cycle. "We are comfortable extending weekly trade credit to Kmart because their debtor-in-possession financing is now in place. Additionally, we believe the priority given in bankruptcy to post-petition trade creditors adequately protects Fleming's interests," noted Marquard.

    In addition to the $76 million, Fleming has an additional net claim of approximately $30 million, representing primarily merchandise shipped after Jan. 18, 2002, and non-merchandise receivables including reimbursements due under the supply contract such as unreimbursed transportation costs, unreturned pallets and vendor rebates. Fleming will submit a claim against these receivables.

    "Kmart and the U.S. Bankruptcy Court have made swift and significant progress in this matter," said Mark Hansen, chairman of the board and CEO of Fleming. "We are especially pleased with Kmart's determination to complete its reorganization as quickly and smoothly as possible. Importantly, we are confident that we can assist and support Kmart through this important restructuring process, especially with our low-cost supply chain."

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