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By Barbara Grondin Francella
SPRINGFIELD, Va. -- Shell-branded petroleum marketer Joe Mamo, operator of DAG Petroleum Suppliers LLC, purchased 18 locations from Shell/Motiva in Arlington and Alexandria Va.
Distributor Mamo bought the real estate and dealer contracts through two newly formed companies for an undisclosed price. But Mamo, who already owns 26 other Shell-branded, dealer-operated and contract-operator locations in the Washington D.C. area, said he put up nearly 40 percent of the purchase price, financing the other 60 percent.
"We've known these markets for more than 23 years and felt this was a great opportunity," Mamo told CSNews Online, who has a long-term contract with Shell. "But it was a tough deal to get done given the financial environment. If major oil companies want to divest additional locations, like they are trying to right now, they will have to take some paper back—carry secondary financing themselves—to make it easier for distributors to finance these stations. If you have to come up with 40 percent of the down payment, big deals won't be done. They have to think outside the box, to make sure financing is available."
He continued, "If Shell and Exxon are trying to sell 2,000 stations, buyers would need $3.5 billion in [combined] financing, which is not there for GM, let alone distributors. These big oil companies will have to take some notes back to entice the distributors. They don’t want to offer the sites to the dealers, because it is a time-consuming process. They want to do larger, bulk sales."
Mamo said he won the bid for the locations against a number of other jobbers. "There have been many jobbers who have won bids to buy locations, but then can't get financing, so the deals don't close, " he noted.
The deal initially included 19 Shell-branded stations, but one lease expired during negotiations, Mamo said.
Mamo purchased the locations through his newly formed NOVA Petroleum Suppliers, which handles the supply contracts, and Nova Properties, which owns the real estate. Financing was handled by PetroProperties & Finance LLC.
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