You are here
BLOUNTVILLE, Tenn. -- With the court's approval of its $6.25 million bid, Florida Sunshine Investments is the new owner of the 47-unit Appalachian Oil Co. (Appco) convenience store chain.
The self-financed sale—backed by real estate magnate Jeff Greene—differs significantly from the ill-fated Titan Global Holdings purchase in 2007, which subsequently lead the c-store chain into bankruptcy in February 2009. In a highly leveraged purchase, Titan then sold the majority of Appco properties for $15 million to help finance the deal, which also involved borrowing another $20 million from Greystone Business Credit, the Johnson City Press reported.
Greene’s purchase comes from his own cash, as will any store investment, the report stated.
The bid by Florida Sunshine beat out another bid by Appco’s initial suitor, Empire Petroleum, which had lowered its offer of $9.1 million to $5.5 million, according to the report.
"I wanted to be able to create a bidding competition, and we negotiated the ability to talk to somebody else," Andy Weber, Appco’s chief restructuring officer and a senior vice president of NRC Realty & Capital Advisors, told the paper. Weber also gave CSNews Online an exclusive inside look at the sale of the APPCO chain earlier this year.
Weber told the court he and Greene discussed the convenience industry in mid-August, when Greene inquired into valuation and performance data. Greene's bid for the retailer followed a week later, according to the report.
An agreement allows for the transition of ownership of the various beer licenses and other official paperwork it needs to operate in Tennessee, Virginia and Kentucky. It was unclear if Florida Investments would continue operating the stores under the Appco name.
The purchase will preserve the jobs of store employees, as well as much of Appco’s central office, staff since Greene is entering the c-store business, the Johnson City Press reported.
"I’m glad to hear a sale has been arranged where the majority of Appco employees will keep their jobs," Judge Marsha Parsons said after approving the sale motion.
The deal also includes roughly 100 dealer locations where Appco provides gas, according to the report. All of the locations are leased, with more than half owned by Jim MacLean, who sold Appco to Texas-based Titan Global Holdings nearly two years ago in a $30 million leveraged buyout. On Feb. 9, Appco filed chapter 11 after months of struggle, when stores ran out of fuel and inside merchandise, and in come cases, had lottery sales removed.
In March, Appco gained "debtor in possession" financing from lender Greystone Business Credit to keep operating, but typically saw losses of more than $1 million a month, according to the report.
The next month, Weber was retained as Appco’s "chief restructuring officer" and charged with selling the chain.
"My understanding is that [Florida Sunshine] intends to retain all employees at the store level, and all corporate office employees with the exception of possibly four," Weber told the paper. "They intend to stock the stores at a more full level than they are today and to put in the other necessary cash to make them competitive."
It is good news for Nancy Rose, who has managed an Appco convenience store in Rogersville, Tenn., for more than two decades.
"It will make a total difference, especially if we get the lottery back and we get our phone cards," Rose said in the report. "The lottery will be very important because it will bring more customers back in." Speaking of her corporate office colleagues, she said: "I think we need to keep those people at the office, because they’re familiar with everything we’ve done for years, including when we were making plenty of money."
She also noted the hard work and patience of store associates during the uncertain times.
"I appreciate the girls at the store with me that stuck it out, because they have gone through hell this past year," she told the paper. "Now we just need to get in with this new company and see what they require, how they want things run, and let’s go for it."
Florida Investments and Greene also bought Appco's sister company, convenience store operator and petroleum distributor Crescent Oil. Crescent was purchased by Titan Global in late 2008 and filed for chapter 11 days before Appco did, in February 2009.
The outcome for Appco's creditors remains uncertain. As a secured creditor, Greystone has first priority on sales proceeds, and it agreed to a "carve out" formula that will send $340,000 of the proceeds to the unsecured creditors committee. In addition to that amount, they’ll get $750,000 through another agreement involving former owner MacLean and an escrow account, the paper reported.
The hundreds of unsecured creditors were owed more than $7 million when Appco filed for bankruptcy, according to the report.
APPCO Sale Approved by Court
Florida Sunshine Goes After Appco
Crescent Oil Acquired by Florida Sunshine Investments