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GREENEVILLE, Tenn. -- An 11th-hour financing arrangement reached in bankruptcy court Friday means Appalachian Oil Co. (Appco) convenience stores should have gas, groceries and other products that have been recently missing or in short supply, according to a report in the Kingston Times-News.
The news comes at a crucial time, when many of Appco's stores may benefit from an influx of visitors during next weekend’s Bristol NASCAR race.
"We look forward to welcoming back our loyal customers," Bryan Chance, CEO of Appco's parent company, Titan Global Holdings, told the newspaper.
Publicly traded Titan bought Appco from longtime owner Jim MacLean for $30 million in September 2007. Appco, which filed Chapter 11 bankruptcy Feb. 9, began having serious financial difficulties late last fall, and its stores have been without gasoline since the first of the year. Groceries and other items have dwindled as vendors quit deliveries in January, the newspaper noted, and stores were unable to offer lottery tickets or process money orders.
Friday afternoon, Chance thanked the 400-plus employees who have continued to operate the stores during the uncertainty of the past few months. "They have been faithful continuing to come to work, and they are the future of the company," Chance said. "They’re tremendous in their efforts."
The debtor in possession (DIP) financing agreement, which includes a "trade DIP" with Appco’s major grocery supplier and a $500,000 DIP financing with its lender, almost didn’t happen, according to the report.
Appco’s attorney, Mark Dessauer, filed a motion for trade DIP financing late Thursday that didn’t sit well with any other players in the case, including Judge Marcia Parsons and U.S. Trustee Patricia Foster, and the attorney for Greystone Business Capital, Titan’s lender and Appco’s only secured creditor.
Those parties all said they needed more time to review the motion and make sure it protected other creditors, and Parsons reminded Dessauer he had agreed to provide 48 hours’ notice before a DIP financing hearing.
"To have the hearing this morning on this notice ... really offends the sensibilities of anybody who was to objectively evaluate this issue," Parsons was quoted as saying in the report. "This proposal basically gives the bank to these trade creditors on essentially no notice to the creditors."
Others were equally unimpressed, but Dessauer and John Carlton, an attorney representing the creditors' committee who had helped draft the deal, suggested Appco’s day of reckoning was fast approaching.
"If this financing arrangement is not approved, there are very, very few options left for Appco to go forward as a going concern," Dessauer said. "Race week generates substantial revenues for convenience stores. It's probably one of the most valuable weeks for Appco, and it's imperative that it's going to be able to open its stores. Right now they have no gasoline and very limited groceries."
Before closing the morning hearing, Parsons left the door open for what occurred Friday afternoon by telling Dessauer, Greystone attorney Glenn Rose and others that if they could come to a "meeting of the minds" by that afternoon, she would consider temporarily approving a financing arrangement, according to the report.
Friday’s financing agreement includes a budget Chance said is "very conservative" in its revenue estimates.
"If customers return as they have in the past, we’ll exceed those budgets and really secure the future of Appalachian Oil," he said.
The company closed its Glade Spring, Va., store last week and Chance said the Chapter 11 proceeding will leave Appco reviewing its locations for profitability.
"We may choose to exit some locations and grow in some other locations," he said.