Willmott, Peter S. 1937–
Peter S. Willmott
Chairman and chief executive officer, Willmott Services
Born: 1937, in Glens Falls, New York.
Education: Williams College, BA, 1959; Harvard University, MBA, 1961.
Family: Married Bonnie (maiden name unknown, divorced); married Michele (maiden name unknown); children (from first marriage): four.
Career: American Airlines, 1961–1962, senior financial analyst; Booz, Allen & Hamilton, 1962–1966, management consultant; ITT Continental Baking Company, 1966–1974, vice president; Federal Express Corporation, 1974–1977, senior vice president of finance and administration; 1977–1980, executive vice president; 1980–1983, president and COO; Carson Pirie Scott & Company, 1983–1989, chairman, CEO, and president; Willmott Services, 1989–, chairman and CEO; Zenith Electronics Corporation, 1996–1998, CEO and president; Fleming Companies, 2003, interim CEO and president.
■ Fleming Companies, a leading wholesale grocery distributor, announced on April 2003 that it had filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. During the previous two years Fleming had undergone federal investigation by the U.S. Securities and Exchange Commission (SEC) concerning questionable business and accounting practices, faced a class-action shareholder lawsuit concerning the validity of its public statements, severed its relationship with its biggest customer Kmart Corporation, and saw its stock price plunge to less than one dollar per share. In 2003 Peter S. Willmott, who was already a member of the company's board of directors, was brought in to lead reorganization, assuming the position of interim chief executive officer and president.
Headquartered in the Lewisville suburb of Dallas, Texas, Fleming Companies supplied branded and private-label consumer grocery and nonfood items to convenience stores around the country. Fleming handled such items through its Core-Mark International convenience distribution business based in South San Francisco, California. Though by 2004 Fleming focused on the convenience industry, before its 2002 bankruptcy it supplied supermarkets, supercenters, discount stores, concessions, drug stores, and military commissaries and exchanges nationwide. It also served mass merchandisers and independents under Fleming's franchised names, IGA and Piggly Wiggly.
HOW FLEMING GOT INTO TROUBLE
Mark Hansen was removed from the position of chief executive officer at the troubled Fleming on March 3, 2003, a week after the SEC upgraded an informal accounting and trade-practices inquiry to a formal investigation. Hansen had long been criticized for taking Fleming's retail stores into the low-price food business dominated by Wal-Mart. Under Hansen, Fleming came to face shareholder lawsuits and the forced loss of its largest customer, the Troy, Michigan–based Kmart Corporation, which had itself been involved in bankruptcy proceedings.
In January 2003 Kmart ended a major supply agreement with Fleming, which had accounted for about 20 percent of its $15.5 billion in 2002 revenues. With listed book assets of $4.22 billion and debts and liabilities of $3.54 billion as of October 2003, the Fleming board of directors—which included Willmott—and senior management made a thorough analysis of its condition, taking into consideration the loss of Kmart as a customer. It was decided that a Chapter 11 filing would allow the company to continue functioning with minimal impact on operations. Willmott declared bankruptcy for Fleming on April 1, 2003, and sold its grocery wholesale business in August of the same year.
As stated in its bankruptcy filing, Fleming's largest unsecured creditors included financial institutions with claims ranging from $150 million to $400 million. Far smaller were claims by vendors, including several of the largest names in the grain-based foods industry. Campbell Soup Company, ConAgra Foods, General Mills, Kellogg Company, and Kraft Foods were among the 20 largest unsecured creditors, with the largest of these claims totaling $5.8 million.
PREVIOUS LEADERSHIP EXPERIENCE
Willmott admitted that after graduating from Harvard University with an MBA he worked in shirtsleeves until a friend gave him a book on dressing for success. At that point he changed his image, wearing suit coats on a daily basis. Willmott realized that his new image and his new determination to succeed in the business world helped him receive three major promotions early in his professional career. He had extensive stints in the senior ranks of several leading companies, steadily gaining a good reputation with his self-effacing style. Industry experts identified him as someone who could modify his management style to suit the needs of his employer—that is, he had the ability to strictly control and direct employees of a company that needed a strong guiding hand in management, and he also had the ability to bring out his personality when a charismatic leader was needed in a particular company.
Willmott began his career in 1961 as a senior financial analyst at American Airlines, next spending the period between 1962 and 1966 as a management consultant at Booz, Allen & Hamilton. He joined ITT Continental Baking Company in 1966 to become a vice president; in 1974 he moved to Federal Express Corporation, where he served in a number of executive positions: senior vice president of finance and administration (1974–1977), executive vice president (1977–1980), and finally president and chief operating officer (1980–1983).
Willmott next became chairman and president of department-store and retail-services conglomerate Carson Pirie Scott & Company, based in Chicago, Illinois, from June 1983 to June 1989. Beginning in late 1983 Willmott also served as the company's chief executive officer. While with Carson, Willmott focused on developing ways to offer better goods and services to the company's customers. He acquired County Seat Stores, a chain of 275 stores in 32 states that sold casual clothes to young people, in order to expand Carson into a new retailing segment. Willmott also purchased a direct-marketing firm that specialized in mail-order sales. Although acquisitions forced Carson's retail division to post a net loss in 1984, the company showed marked overall improvement after hiring Willmott. Profits increased 60 percent in 1985 over the previous year, with net sales increasing by more than 15 percent in the same period. Willmott sold Carson Pirie Scott in 1989 to P.A. Bergner & Company, operator of the Bergner's and Boston Store chains.
In 1989, after his stint with Carson, Willmott founded and served as chairman and chief executive officer of Willmott Services in Chicago, a retail-holding and consulting company where he continued to work as of 2004. From July 1996 to January 1998 Willmott was chief executive officer and president of Zenith Electronics.
Willmott believed that communication was very important to management. He sometimes paced in his office, pondering the state of the immediate business world—often then emerging to discuss his concerns with staff and employees. In order to build a great company, Willmott ensured that he was close enough to his employees to be able to manage them properly. When referring to his management style, he often compared himself to a sports coach drilling a promising team in the fundamentals of winning.
In April 2003 Fleming's board of directors decided that an immediate change in management was necessary; Willmott was appointed to the top position of chief executive officer. While the board conducted an extensive search for a new CEO, Willmott coordinated the initial restructuring of the company's business operations and finances. Willmott hoped that his actions would allow the company to establish an improved capital and cost structure and position itself for long-term success upon emergence from bankruptcy. He focused on returning Fleming to its core business of providing both food and nonfood items to convenience stores and other related establishments, activities which the company had veered away from, contributing to its financial difficulties.
The board of directors determined that Fleming's reorganization process would require that experienced business-turnaround professionals be assigned to top financial-management positions in order to assist Willmott. Robert Allen was named to the position of acting chief operating officer; together, Willmott and Allen directed day-to-day operations. Ted Stenger of AlixPartners, an international leader in corporate restructuring and turnaround services, assumed the position of chief restructuring officer. Additional experts appointed to Fleming's new management team included the interim chief financial officer Becky Roof and the interim treasurer Mike Scott. As principals of AlixPartners they assisted Willmott in Fleming's reorganization while remaining in the employment of AlixPartners, so as to take advantage of the firm's resources. Willmott also used Blackstone Group, a leading financial and restructuring consultant, as Fleming's financial advisor.
LAYING OUT THE PLAN
Even before securing a bridge loan, Willmott stated to Fleming's employees and customers and to the general public that the company would continue to conduct business at all of its facilities. While concentrating on the company's reorganization requirements, he would attend to improving customer and vendor services, operational efficiency, and financial flexibility. Willmott specifically worked toward renewed trade-credit support, negotiating with creditors for an adjustment in debt level that would be more consistent with the company's assets, operations, and active business model. Willmott declared that the company planned on filing motions with the bankruptcy court in order to implement a vendor program that would allow the company to pay all of its associates in a timely manner.
BRIDGE LOAN AND DIP FINANCING
Fleming described an interim $50 million debtor-in-possession (DIP) financing commitment as a bridge to a permanent $150 million DIP financing package. The interim DIP loan was subject to, among other conditions, the approval of the U.S. Bankruptcy Court. Fleming projected that the $150 million DIP package would provide the company with necessary financing throughout the Chapter 11 process and worked with creditors who were required to sign off on the interim $50 million loan. Willmott publicly announced that new financing and the support of its vendors would ensure that Fleming would be able to deliver on commitments to customers. Willmott secured approval for the needed loan from the Bankruptcy Court in May 2003. At the same time he announced that in order to cut additional costs, Fleming would indefinitely suspend stock-dividend payments and rescind a previously declared but unpaid quarterly dividend payment that had been scheduled for June 10, 2003.
Willmott announced in June 2003 that the Bankruptcy Court approved of agreements to sell 40 company-owned retail stores, including 31 Minnesota-based Rainbow Foods stores that would be sold to Roundy's for approximately $40 million, six California-based Food4Less stores that would be sold to Save Mart Supermarkets for approximately $5 million, and three Food4Less stores that would be sold to Kroger Supermarkets for $2.4 million.
On August 23, 2003, Willmott announced that virtually all of the assets from the company's wholesale-grocery business had been sold. Grocers Supply acquired the Garland Division of Fleming, while Associated Grocers of Florida acquired the Miami Division; Associated Wholesale Grocers of Kansas City acquired the Nashville, Memphis, Memphis GMD, Tulsa, Lincoln, and Topeka Divisions, and C&S acquired the Hawaii, Fresno, Sacramento, Sacramento GMD, LaCrosse, LaCrosse GMD, Massillon, and Milwaukee Divisions. Promising to provide long-term solutions to wholesale customers, associates, and creditor constituents, Willmott remarked that the $400 million gained from these purchase agreements would be applied to the company's $2 billion of debt. Willmott also announced that the company had reduced the number of executive positions by about 350 in order to cut expenses by about $40 million a year.
With sales finalized, the company announced in August 2003 that Willmott had completed his tenure as Fleming's interim chief executive officer and president; he would continue to serve as a member of the board of directors, as he had before he assumed his interim positions. Archie R. Dykes, the nonexecutive chairman of the board, then assumed the responsibilities of chief executive officer. As reported by PR Newswire, upon transfer of power Dykes said of Willmott, "Pete has served Fleming with much distinction under very difficult circumstances and at considerate disruption to his personal life. He has been instrumental in helping make the best of a challenging situation at Fleming. The board of directors is grateful for all that Pete has done in service to the company, and we appreciate his continued role as a member of the board of directors" (August 25, 2003). The leadership team headed by Willmott had successfully reorganized the company with its restructuring and operating expertise.
Willmott sat on the boards of Federal Express Corporation and Security Capital Group, an international real-estate research, investment, and operating company. Willmott also served as chairman of the board for MacFrugal's Bargain Close-Outs and as a member of the board for Browning-Ferris Industries, First Tennessee Corporation, International Multifoods Corporation, Zenith Electronics, Maytag Corporation, Morgan Keegan & Company, and FDX Corporation. He was a member of the board of several civic organizations in both Chicago, Illinois, and the Berkshires, Massachusetts, and a former chairman of the board of trustees at Williams College in Massachusetts. Willmott was a member of the Society of Entrepreneurs beginning in 1992.
OUTSIDE OF WORK
Peter Willmott was an avid fancier of racehorses. In 1989, after selling Carson Pirie Scott, Willmot began buying racehorses in order to breed and race them under the name of Willmott Stables in Kentucky. Willmott was also in partnership with his cousin Thomas Willmott of Boston, Massachusetts, in the Waterfall Stable, named for the New York cities where each were born—Watertown for Thomas and Glens Falls for Peter.
See also entries on Carson Pirie Scott & Company, Zenith Electronics Corporation, and Fleming Companies, Inc. in International Directory of Company Histories.
sources for further information
Fleming Companies, http://www.fleming.com (site discontinued as of March 2, 2003).
"Fleming Completes Grocery Wholesale Transaction," PR Newswire–First Call, August 25, 2003, http://www.forrelease.com/D20030825/dam036.P1.08252003175355.01558.html.
—William Arthur Atkins