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Fleming Selling 28 California Food4Less Stores

SACRAMENTO-The supplier of consumer package goods, under investigation by the Securities and Exchange Commission, is selling the stores to Save Mart Supermarkets for about $165 million.

By Michelle Savage | Updated on November 13, 2002

SACRAMENTO-Fleming Companies Inc. is selling 28 Food4Less locations to Modesto-based Save Mart Supermarkets for about $165 million. Two of the stores are under construction. The purchase price is subject to adjustment based on store sales through closing. The sale could finalize within the next 60 days.

Fleming, a supplier of consumer package goods, says the sale will bring in $130 million in cash, including inventory, and a $35 million reduction of long-term liabilities in the form of capital leases. The company says it will use the cash to pay off its senior secured term loan balance.

As part of the deal, Save Mart, a large supermarket operator, is hooked into a five-year supply arrangement with Fleming. According to Fleming, this supply agreement is expected to represent approximately $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.

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