J.P. Morgan & Co. is syndicating roughly $1 billion in bank financing for Fleming Cos., which is seeking to buy Scrivner Inc., an Oklahoma City based food
wholesaler and retailer.
Fleming, also based in Oklahoma City, is the nation's largest food wholesaler, with annual sales of about $13 billion. Scrivner, which is owned by Franz Haniel & Cie. of Germany, has annual sales of about $6 billion.
Morgan declined to comment, but banking sources said the deal was pitched to prospective syndicate members at a meeting in mid-May. Fleming and Scrivher also declined to comment.
Details of the financing and its specific purpose couldn't be learned. It's unclear, for example, whether the new loans would be used to finance all or part of the acquisition itself, to refinance existing debt, or for some other purpose related to the acquisition.
The purchase price is rumored to be about $1 billion, but it's unclear whether Fleming is seeking to buy Scrivner with cash, stock, or a combination of the two.
One possibility is that all or part of the bank financing would serve as a bridge to permanent financing in the public capital markets after the acquisition is completed.
Fleming has an investmentgrade rating of BBB on its senior debt. Its commercial paper is rated A2. Standard & Poor's Corp. said the company's rating outlook is stable.
Morgan Guaranty Trust Co., the commercial banking unit of J.P. Morgan, has led previous bank financing for Fleming. Most recently, Morgan led a $600 million backup line last fall.
Other lenders in the credit are said to have included the banking units of BankAmerica Corp., First Chicago Corp., First Interstate Bancorp, NationsBank Corp., the Texas Commerce Bancshares unit of Chemical, Wachovia Corp., and several foreign banks.
While some synergies are apparent in a Fleming-Scrivner combination, Brooks O'Neil, a food industry analyst at Piper Jaffray Inc., Minneapolis, said this probably isn't the ideal time for an acquisition by Fleming, which recently took a big restructuring charge.