CSNews Exclusive: Appco Preps for Sale
By Barbara Grondin Francella and Mehgan Belanger
GREENEVILLE, Tenn. -- A final round of court hearings scheduled for June 10 will allow petroleum marketer and convenience store operator Appalachian Oil Co. (Appco) to embark on the sale process for its assets, including more than 50 c-stores, CSNews Online has learned.
A sale package is ready for distribution through NRC Realty Advisors, the agency handling the sale, according to Andy Weber, chief restructuring officer of Appco and an officer of NRC, leading its merger and acquisitions group.
"NRC Realty Advisors has done an outstanding job adapting to the changing dynamics of the company and presenting the opportunity for our buyers," Weber told CSNews Online, adding NRC has been ready for the sale since early May, but he had to get consensus and agreement among the constituencies in Appco, including various landlords, senior lenders and the committee of unsecured creditors.
"Bankruptcy is the ultimate environment for negotiation, and we have had a lot of opportunity in that regard during this case," he said.
Since filing for Chapter 11 bankruptcy in February 2009, some of Appco's stores have faced empty fuel tanks and shelves, no ability to process credit cards or sell lottery. Others have been shuttered, and a few were reopened after agreements were made with vendors to restock the stores. CSNews Online reported April 15, the stores would be sold as part of the bankruptcy process, and Weber said the sale of the stores has generated "amazingly strong interest" from both large and small operators.
"I think buyers realize the store assets are of good quality and in good shape, and that Appco's challenges were driven more by capital structure and owner/lender relationships than anything else," Weber told CSNews Online, adding later: "Appco management performed admirably under a challenging situation, and the stores themselves were not the problem."
He noted Appco and its parent company, Titan Global Holdings, invested in the quality of the store assets, but part of the challenge for the company related to its capital structure after former owner Jim Maclean sold it. Another element was Titan’s corporate structure, with other related and non-related investments, which "took managements' eye off the ball," said Weber, who noted the final nail in the coffin was the lack of adequate working capital available.
"We all know gasoline costs are volatile and can absorb any monetary cushion a company thought it might have," Weber explained. "Retailing in our industry requires a daily diligence focused on pennies, and a differentiated operating model to ensure your long term viability in the market."
He continued: "You have to stay in touch with your operations and your customers on a daily basis, otherwise, the competition will eat your lunch."
While a single buyer would provide the best opportunity for Appco employees to transition to new employment, the chain is being marketed in a way that also allows a small entrepreneur to leverage his or her local market knowledge, and regional operators could use their scale to dramatically increase their bottom line, Weber explained.
"The sales process approved by the court provides Appco with the opportunity to explore a single transaction and a series of smaller sales. I have an obligation and fiduciary responsibility to maximize a sale value for the benefit of those creditors involved in the case," he said.
Related News:
Former Crescent Oil Owner Sues Titan Global
Appalachian Oil's Debts Include $300,000 to Dealers
Appalachian Oil Assets to Be Sold
GREENEVILLE, Tenn. -- A final round of court hearings scheduled for June 10 will allow petroleum marketer and convenience store operator Appalachian Oil Co. (Appco) to embark on the sale process for its assets, including more than 50 c-stores, CSNews Online has learned.
A sale package is ready for distribution through NRC Realty Advisors, the agency handling the sale, according to Andy Weber, chief restructuring officer of Appco and an officer of NRC, leading its merger and acquisitions group.
"NRC Realty Advisors has done an outstanding job adapting to the changing dynamics of the company and presenting the opportunity for our buyers," Weber told CSNews Online, adding NRC has been ready for the sale since early May, but he had to get consensus and agreement among the constituencies in Appco, including various landlords, senior lenders and the committee of unsecured creditors.
"Bankruptcy is the ultimate environment for negotiation, and we have had a lot of opportunity in that regard during this case," he said.
Since filing for Chapter 11 bankruptcy in February 2009, some of Appco's stores have faced empty fuel tanks and shelves, no ability to process credit cards or sell lottery. Others have been shuttered, and a few were reopened after agreements were made with vendors to restock the stores. CSNews Online reported April 15, the stores would be sold as part of the bankruptcy process, and Weber said the sale of the stores has generated "amazingly strong interest" from both large and small operators.
"I think buyers realize the store assets are of good quality and in good shape, and that Appco's challenges were driven more by capital structure and owner/lender relationships than anything else," Weber told CSNews Online, adding later: "Appco management performed admirably under a challenging situation, and the stores themselves were not the problem."
He noted Appco and its parent company, Titan Global Holdings, invested in the quality of the store assets, but part of the challenge for the company related to its capital structure after former owner Jim Maclean sold it. Another element was Titan’s corporate structure, with other related and non-related investments, which "took managements' eye off the ball," said Weber, who noted the final nail in the coffin was the lack of adequate working capital available.
"We all know gasoline costs are volatile and can absorb any monetary cushion a company thought it might have," Weber explained. "Retailing in our industry requires a daily diligence focused on pennies, and a differentiated operating model to ensure your long term viability in the market."
He continued: "You have to stay in touch with your operations and your customers on a daily basis, otherwise, the competition will eat your lunch."
While a single buyer would provide the best opportunity for Appco employees to transition to new employment, the chain is being marketed in a way that also allows a small entrepreneur to leverage his or her local market knowledge, and regional operators could use their scale to dramatically increase their bottom line, Weber explained.
"The sales process approved by the court provides Appco with the opportunity to explore a single transaction and a series of smaller sales. I have an obligation and fiduciary responsibility to maximize a sale value for the benefit of those creditors involved in the case," he said.
Related News:
Former Crescent Oil Owner Sues Titan Global
Appalachian Oil's Debts Include $300,000 to Dealers
Appalachian Oil Assets to Be Sold