The term loan "B" for Fleming Companies held its ground this week despite admissions from the company that it was the subject of a Securities and Exchange Commission informal inquiry. While the company's bonds and stock stumbled on the news, bank debt traders brushed it off and said that the "B" paper did not change hands and was still quoted in the 97-98 range. "Everyone gets investigated these days," said one dealer.
The inquiry will focus on Fleming's vendor trade practices, how the company presented its quarter 2001 adjusted earnings per share data, and how the company calculated comparable store sales in its discontinued retail operations. Market players said the SEC inquiry was also offset by the news that Lewisville, Texas-based Fleming has entered into agreements to sell 26 of its supermarket stores. The transaction is expected to net $165 million.
The company secured a new facility early this year during the small window of time when companies were getting "B" loans secured at slim spreads. Fleming originally came to the market looking for a $350 million "B" term loan, but after the tranche was twice oversubscribed the piece was upped to $425 million, despite its LIBOR plus 2 1/4 % price. Matt Hildreth, Fleming treasurer, said he could not comment on the inquiry. He did note that the bank debt is amply backed by collateral.