Fleming continues to be shrouded with uncertainty as people try to separate fact and fiction

By Sara Rosenberg

New York, March 14 - Fleming Companies Inc. was once again said to be the name of the day in the secondary bank loan market as people tried to differentiate between what's really going on with the company and what is purely rumor. Also, according to sources, the company held a bank meeting on Friday, although details of the meeting and confirmation by the company could not be obtained by print time. Talk around the market though was that the meeting went well.

According to one trader, indications on the term loan B heard around the market were 86/87 and 88/90, so he quoted the paper at 87/90 to be on the safe side. However, a second trader - who told Prospect News he traded Fleming paper during the session - said neither of those indications were accurate but he declined to reveal his quotes.

Earlier this week, Fleming's term loan was quoted at 90 bid and 92 offered, compared to quotes at the end of February in the 97/99 range.

So far, news that is known as factual includes management changes, termination of the company's contract with Kmart and lower-than-expected financial results.

Most recently, the company announced that Mark Hansen, chairman and chief executive officer resigned. Peter S. Willmott was named as interim chief executive officer and president and Robert Allen was given the new position of acting chief operating officer.

At the end of February, news emerged that the previously reported investigation into business practices had become a formal investigation by the Securities and Exchange Commission.

Also in February, Kmart and Fleming announced that they had terminated their supply relationship by means of a rejection of the parties' 2001 contract through Kmart's chapter 11 reorganization. Following the contract termination, Fleming's term B bank debt dropped to around 97 bid, from around 98½ to 99.

However, this drop in levels following the Kmart news was viewed by some as a possible investment ploy, with one fund manager explaining that Fleming is in the process of trying to sell retail stores and if the retail stores are sold, then paydowns on the bank debt are expected. The fund manager continued to say that people were trying to use the Kmart news to get a cheap deal and take advantage of what could be a substantial paydown in the near future at par.

Fleming is in the process of trying to sell 110 existing price-impact stores that operate under the Food 4 Less and Rainbow Foods banners. With the proceeds from the asset sales, Fleming plans on repaying its entire term loan.

In January, the company had to amend its debt/EBITDA covenant due to fourth quarter EBITDAL results, and the anticipated amount and timing of the proceeds from the retail store divestiture.

A lender call discussing the amendment was held following the release of worse-than-expected financial estimates in mid-January, at which time the company also updated participants on the progress of the previously announced asset sales.

The company explained during the call that the sale of 110 existing price-impact stores that operate under the Food 4 Less and Rainbow Foods banners are going slower than planned and that the asset sales are expected to bring in less than the previously anticipated amount of $450 million.

Meanwhile, in the primary, there is talk circulating that the Dole Foods Co. Inc. $1.15 billion credit facility will be downsized by $25 million in response to news that the company's high-yield bond offering will be upsized by $25 million to $475 million from $450 million .

However, according to a syndicate source there has not yet been a definitive change since the bond deal has not priced yet. Pricing on the bonds is currently scheduled for Monday.

Deutsche Bank, Scotia Capital and Bank of America are the lead banks on the loan.

The loan consists of a $600 million 51/2-year term loan B with an interest rate of Libor plus 375 basis points with the borrowing being a Bermuda subsidiary of Dole, a $250 million five-year term loan A with an interest rate of Libor plus 325 basis points via a U.S. subsidiary and a $300 million five-year revolver (in dollars and euros) with an interest rate of Libor plus 325 basis points.

Proceeds from the facility, combined with the bond deal, will be used to help fund the buyout of Dole by DHM Acquisition Co., which is wholly owned by David H. Murdock.

Dole is a Westlake Village, Calif. producer and marketer of fresh fruit, vegetables and flowers.

Back in the secondary, Nextel Communications Corp. was a big trader on Friday with four trades taking place, according to one trader. The term loan B and C traded at 96¼ and the term loan D traded at 95 1/8, steady with previous levels. The term loan A, however, moved up slightly, with earlier trades occurring at 92¾ and then trading higher at 93 by the end of the day.

"I don't know why people keep buying this term A," the trader said. "It's Libor plus 125. But they do."

The Reston, Va. wireless company's paper has been active for quite some time now since the company gained the reputation of being a good credit due to never disappointing investors with regards to earnings announcements and its ability to add customers.

Insight Midwest traded a touch softer on Friday at 96 5/8, although there was no particular stimulus behind the paper's activity or the slight weakening, according to a trader.

Charter Communications Inc. term loan B was bid at 86¼ and offered at 863/4, according to a trader, who explained that although the paper seems a bit firmer there was no trading activity in the name.

On Thursday, Charter's term loan B was reported as trading at 861/2. The bank debt spent the first half of the week rallying along with the rest of the cable sector, according to sources. On Monday, the loan was up about a point, trading at 85 7/8. On Tuesday, quotes moved into the mid-86's. And on Wednesday, the paper settled at 85½ bid, 86½ offered.

In distressed debt, a source said: "Conseco got a slight nudge."

Conseco Inc.'s bank debt was quoted at 60 bid/63 offered, up three from Thursday's closing price of 57 bid/60 offered.

The movement was due to court approval of the company's sale of its troubled finance unit for $1.095 billion to CFN Investment Holdings LLC and a General Electric Co. unit. On Thursday, Conseco had asked the court for more time to iron out details, but its request was rebuffed.

Conseco auctioned its Conseco Finance unit earlier in March to CFN, an investor group, and GE Consumer Finance for $1.01 billion in a move to help pay off more than $6 billion in debt to banks and bondholders. The buyers on Friday increased the price they would pay by $85 million to overcome objections from certain Conseco creditors.

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