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Two months after Convenience Store News first reported Convenience USA Inc.'s inability to close on a deal to acquire 198 Mapco stores due to ongoing financial difficulties, the 236-store chain said it has filed for Chapter 11 reorganization with bankruptcy court in North Carolina.
Convenience USA becomes the third major convenience store chain to file for bankruptcy protection in the last four months. Paducah, Ky.-based Duke & Long Distributing Co. Inc. filed for bankruptcy and began selling off its assets in February. Last month, Richmond, Va.-based Fast Mart Convenience Stores Inc. also filed due to increasing debt.
Like Fas Mart, Convenience USA was forced to make the Chapter 11 filing because the company has too much debt, according to Donald Draughon, chairman and CEO of the chain.
"With the volatility in gasoline prices, we could no longer sustain our debt level and filed under Chapter 11 to reorganize our debts," Draughon said. "We have a very strong management team dedicated to the continued improvement of our operations. I am confident that with our ability to restructure our balance sheet, Convenience USA will continue to operate as a sound company and move forward with a plan that will allow us to once again grow the business."
The company's stores, located in Alabama, Florida, Georgian and North Carolina, will remain open and no layoffs are expected. "Our customers will see business as usual," Draughon noted.
Convenience USA brought in a new management team last year that Draughon credited for improving both merchandise and gasoline sales. "This group is very well respected and has strong relationships with the trade community that will continue to strengthen during this reorganization process," Draughon said. "We will communicate with our vender partners to ensure they fully understand our intent and that the operational improvements and sales growth at C-USA continues."
In addition, Convenience USA also announced that it has retained The Spectrum Capital Group, an Albuquerque, N.M.-based investment firm that specializes in reorganization.