C&S: AWG TO BUY SIX WAREHOUSES

Mark Hamstra

WILMINGTON, Del. -- C&S Wholesale Grocers last week revealed that it was planning to resell six of the warehouses it is seeking to acquire from Fleming Cos., Dallas, to Associated Wholesale Grocers, Kansas City, Kan., according to a Fleming spokesman.

At a bankruptcy court hearing here, C&S said it had tentative plans to sell to AWG its full-line warehouse divisions in Lincoln, Neb.; Memphis, Tenn.; Nashville, Tenn.; and Tulsa, Okla., along with two general-merchandise distribution centers in Memphis and Topeka, Kan.

In addition, C&S told the court it planned to sell three other full-line DCs to three different wholesalers. Associated Grocers of Florida, based in Miami, would buy the Miami warehouse; Associated Grocers of Baton Rouge, La., would buy the Lafayette, La., facility; and The Grocers Supply Co., Houston, would buy the Garland, Texas, DC.

None of the proposed buyers could be reached for comment last week.

Of the nine facilities listed, the site in Lafayette, La., had been slated for closure, while the others had been scheduled to remain in operation. Other full-line DCs not included in the resale plans and that remain open are located in Ewa Beach, Hawaii; Fresno, Calif.; LaCrosse, Wis.; Massillon, Ohio; and Milwaukee. General-merchandise DCs not included are located in Sacramento, Calif.; LaCrosse, Wis.; and Dallas.

C&S disclosed its plans when the hearing began last Monday. The hearing had not yet ended late last week after it had been delayed to allow C&S and Fleming to resolve some "technical issues" related to the sale, said Jeff Richards, an attorney for Fleming.

During a break in the proceedings, he told SN that both Fleming and C&S expected the sale to be approved. "We're working very hard on resolving the open issues," he said. "They are all legal and hyper-technical in nature."

As previously reported, C&S offered to pay $400 million for the grocery-distribution assets of Fleming, which filed for Chapter 11 bankruptcy protection on April 1. No other bidders for Fleming's assets emerged during the auction process.

In a memo to its employees last week, Fleming said other assets also could be sold to third parties. "Such assignments are contingent on Fleming receiving U.S. Bankruptcy Court approval of the assets purchase agreement, the completion of C&S' negotiations with the third parties, and the satisfaction of closing conditions and regulatory approval," the memo stated.

The initial closing of the sale was still expected to occur by the middle of this month. Fleming said it had agreed to operate the divisions for up to six months during the transition to new ownership.