FLEMING SET TO BID FOR ABCO ASSETS

ELLIOT ZWIEBACH

OKLAHOMA CITY -- Fleming Cos. here said it will seek to acquire the assets of Abco Holdings, owner of Abco Foods, Phoenix, in early January.

Fleming, which is Abco's primary wholesaler and, since last month, its majority shareholder, instituted foreclosure proceedings against the company late last month after Abco shareholders failed to accept a Fleming-sponsored recapitalization plan. Fleming will seek to acquire the assets once foreclosure proceedings are concluded, probably in early January.

The foreclosure was necessary because of triggering mechanisms in loan agreements with Abco Holdings. Under the foreclosure, Fleming was required to open the asset sale process to other interested parties. Fleming must publish legal notices for 30 days to let the public know that the assets of Abco Holdings, which include the markets, store inventory and leases, are for sale. Abco Holdings owes Fleming $71 million, including a $21 million note that Fleming purchased from Chemical Bank last month; $39 million in outstanding loans and trade receivables from Fleming to Abco that were made over the last few years, and $10.8 million in additional credit that Fleming extended to Abco two weeks ago. Fleming said it will bid the value of Abco's $71 million debt obligation in early January to gain ownership of Abco Holdings' assets. There may be other bidders, and a court will determine who ultimately takes control of the assets, the company said. Abco, with retail sales of about $624 million, represents a major portion of Fleming's wholesale business in Arizona. According to Robert E. Stauth, Fleming chairman and chief executive officer, "Fleming intends to support the growth of proven retail concepts, and Abco's 'Desert Market' format has been a winner in a highly competitive marketplace." Prior to last month's foreclosure, Fleming had gained an equity position in Abco of about 45%

as a result of loaning money to the chain over several years. In late September, Abco defaulted on loans to Fleming and Chemical Bank, and Abco shareholders subsequently rejected Fleming's recapitalization proposal, an action that led Fleming to exercise warrants that enabled it to become the company's majority holder. In mid-November Fleming purchased the Chemical Bank debt and instituted foreclosure proceedings. Fleming officials said Abco management will remain intact during the foreclosure proceedings, adding that Fleming expects Abco to be able to pursue its growth plans while maintaining existing relationships with trade creditors and customers during that period. Ed Hill, Abco president, said, "We believe Fleming's new role proves its commitment to Abco's future growth. With this [$10.8 million] infusion of capital, we will move forward rapidly to implement Abco's plans to open more new stores and complete several remodels next year." Abco, which was established in 1984, began receiving loans from Fleming in 1988 and went through financial restructurings in 1991 and 1992.