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Fleming bankruptcy pain spreads { April 17 2003 } Original Source Link: (May no longer be active)    http://reuters.com/financeNewsArticle.jhtml?storyID=2586164&type=bondsNews http://reuters.com/financeNewsArticle.jhtml?storyID=2586164&type=bondsNews Fleming bankruptcy pain spreads to U.S. food cos. Thu April 17, 2003 02:45 PM ET By Deborah Cohen CHICAGO, April 17 (Reuters) - The bankruptcy of grocery distributor Fleming Cos. Inc. FLMIQ.PK is having a ripple effect on its food suppliers as companies ranging from Kraft Foods Inc. KFT.N to Hershey Foods HSY.N feel the pinch. Fleming, a major U.S. wholesale distributor of food to supermarkets, filed for bankruptcy earlier this month after it lost $4.5 billion in business from its largest customer, discount retailer Kmart Corp. Kmart is also in bankruptcy and struggling to restructure by shuttering U.S. stores. U.S. food companies are seeing an impact as inventory reductions crimp their shipment growth and exposure to Fleming's liquidity problems force them to set aside extra cash to cover payments that Fleming may default on. Fleming on Wednesday asked the court to approve $150 million in debtor-in-possession financing to supplement its existing cash flow as it attempts to restructure. The Lewisville, Texas-based company has also proposed an agreement that would let suppliers that meet certain conditions -- such as agreeing to ship merchandise and restore normal trade terms -- to participate in a lien against the company. A representative for Fleming did not return calls seeking comment on the status of that request. Meanwhile, some companies are taking precautionary measures. Hershey Foods Corp. HSY.N , the largest U.S. chocolate maker, said Thursday that it took a first-quarter pre-tax charge of $5.0 million, or 2 cents a share, creating a "bad debt" reserve to protect itself from Fleming. On Tuesday, Kraft Foods Inc. KFT.N , the largest North American food maker, said shipments in its first quarter slowed considerably from their pace in the fourth quarter of 2002, hampered by reductions in retailers' inventories. Kraft cited pressure from the Kmart and Fleming bankruptcies but said it is continuing to ship product to both companies under "appropriate" credit terms. "Specifically, for Kmart and Fleming, lower inventories, store closing and more restrictive credit terms during Q1 all impacted volume," a Kraft executive told analysts during a conference call to discuss quarterly results. Kraft said it would be able to manage through difficulties with Fleming without setting up a special reserve fund. On Thursday Hormel Foods Inc. HRL.N , the maker of Spam luncheon meat and Dinty Moore stews, said its second-quarter earnings would be hurt by Fleming by an undisclosed amount. "We do anticipate a negative impact from our Fleming business," Hormel spokeswoman Julie Craven told Reuters. She said that no decision had been made about setting up a reserve fund. Other packaged food makers, including Sara Lee Corp. SLE.N , Kellogg Co. K.N and H.J. Heinz Co. HNZ.N , have yet to comment on their Fleming exposure. ConAgra Foods Inc. CAG.N expects "no material financial impact," from Fleming, its spokesman, Chris Kircher, told Reuters.

Budget cutback healthcare poor { April 28 2003 } Buffett forecasts doom California state budget crisis { April 23 2003 } Dollar edges lower { April 9 2003 } Economy feeling sars effect Fed finds lackluster economy Fed rescue plan print money Fleming bankruptcy pain spreads { April 17 2003 } Gold up after war { April 9 2003 } Greenspan for 5th term { April 23 2003 } Jetblue orders 65 airbus { April 24 2003 } Markets red after war Nation jobless climbs { April 17 2003 } Ny mayor ten thousand more layoffs { April 15 2003 } Oil tops 30 barrel { April 17 2003 } Profit warnings hit war enthusiasm States budget shortfall { April 21 2003 } Treasure could face default { April 29 2003 } Files Listed: 18

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