Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 26, 1993 TAG: 9302260160
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
SOURCE: The Associated Press
DATELINE: SALISBURY, N.C. LENGTH: Medium
LION STOCK DUMPED
Two top Food Lion officials, including the grocery chain's president, have filed to sell large chunks of the company's stock.Tom Smith, the embattled supermarket chain's president and chief executive officer, last week filed with the Securities and Exchange Commission to sell 150,000 shares of Class A stock - 10.5 percent of his roughly 1.7 million-share Class A holdings, or 5 percent of his total Food Lion shares. Smith owns about 1.5 million shares of the company's Class B stock.
Vince Watkins, Food Lion's vice president of special projects, filed to sell 52,831 Class A and 16,000 Class B shares, both through Goldman Sachs & Co.
Holders of Food Lion's Class A common stock generally are not allowed to vote on issues before the shareholders. Class B shareholders are entitled to one vote per share.
Watkins said Smith will sell "in order to fulfill personal financial obligations that were due." Watkins said he was forced to file because of a margin call.
Watkins said he had borrowed against his stock to cover other investments. As the price of Food Lion stock fell, he pledged additional stock to his broker, Goldman Sachs & Co. But the broker recently "said either you send cash or we're selling the stock on margin," Watkins said.
"If I had any choice left at all, I wouldn't have sold," he said. "I think in the long run we're beginning to do some things that will re-establish stockholders' confidence."
Food Lion stock dropped after ABC-TV's "PrimeTime Live" reported on allegedly unsanitary conditions at the company's stores.
Even the Virginia legislature has reacted to the television show's allegations. It has passed a bill that says a grocery store can repackage meat, poultry or seafood only if the label from the original package is put on the new package.
The legislation is informally called the "Food Lion bill" because it relates to the chain's former practice of repackaging meats when their sell-by dates expired, then offering the newly packaged items at a discount.
ABC said the chain used the repackaging as a way to sell bad food. Food Lion officials argued that the practice was a way to offer food for sale while it was still edible, adding the shelf life for much food is longer than the "sell-by" date on labels.
The chain stopped the practice after the television show, however.
The company also is under investigation by the Department of Labor for claims that its "effective scheduling" system creates a work atmosphere that forces employees to work "off the clock," or without compensation. Effective scheduling tells workers how much time should be alloted to complete a task.
This week, 21 former and current Food Lion workers added their names to a complaint filed with federal labor officials in 1991.
The complaint is backed by the United Food & Commercial Workers' International Union. The additional names bring the number of employees involved to 334. Food Lion employs more than 60,000 workers in 14 states.
The company recently filed a lawsuit against the United Food and Commercial Workers' Union, accusing it of abusing the legal process. It also is suing ABC-TV, alleging that information in the show was falsified.
Staff writer Sandra Brown Kelly contributed to this story.