You are here
RICHMOND, Va. -- Eight months after filing for bankruptcy, Rennie Petroleum Corp., a leading petroleum marketing and convenience-store company headquartered here, is selling its chain of 24 convenience stores throughout central and eastern Virginia, along with its motor fuels supply agreements for an additional six fuel outlets, according to Matrix Capital Markets Group Inc.
The auction sale, being managed by Matrix Capital Markets, is being held pursuant to a sale motion submitted by Rennie Petroleum in its Chapter 11 case in the U.S. Bankruptcy Court for the Eastern District of Virginia. Both the procedures for the stores' sale and the sale of the stores through the auction are subject to the approval of the court. The stores are being sold free and clear of liens, claims and encumbrances.
CSNews Online reported in January that Rennie Petroleum had filed for reorganization under federal bankruptcy law. The company listed assets of $4.67 million and liabilities of $7.98 million. Liabilities included $3.76 million in unsecured, nongovernmental claims. The company listed its largest unsecured creditor as CITGO Petroleum Corp. of Tulsa, Okla., with a $3.3 million claim.
Around that time, owner Donald J. Rennie told the Times-Dispatch that he regretted having to file for bankruptcy protection. "We . . . are optimistic that we will succeed and emerge from Chapter 11 as soon as possible," he said then.
In the bankruptcy filing, the company said its business changed for the worse in the early part of the decade when major oil companies began selling gasoline to their own stations cheaper than they sold it to wholesale purchasers, such as Rennie. To stay competitive, Rennie said it lost 15 cents a gallon on sales and laid off staff, subleased stores and cut expenses. Beginning in 2003, Rennie said increased competition from such rivals as Sheetz, Wawa and Sam's Club resulted in reduced sales and profit margins. Cash flow declined while rents continued to rise, the company said in the bankruptcy filing.
The company also stated in the court filing that it was locked into an uncompetitive fuel-supply contract, which requires Rennie to pay credit-card fees that cost more than independent card services would charge. In addition, the chain said it had been unable to secure financing to replace outdated and worn car-wash equipment and has lost 40 percent of its car-wash business, which provided a significant portion of the company's profit.
According to Matrix, two of the company's convenience-store properties are owned, with the remaining 22 subject to third-party lease agreements. The company operates six of the convenience stores, has commissioned dealers in 11 stores and full dealers in seven stores. In addition, the company has supply agreements for additional locations, but does not have any property interest in those locations.
Rennie Petroleum sold more than 35 million gallons of motor fuels in 2006, with the vast majority of the locations selling Citgo-branded motor fuels. In addition, two of the stores offer Shell-branded fuels and one store sells fuels under the Rennie name. This sale is not contingent on a buyer assuming a motor fuels supply agreement from the company and a buyer does not have to keep the stores branded as they currently are, Matrix said.
The average lot size for the 24 stores where Rennie's controls a property interest is approximately one acre with an average building size of more than 1,500 square feet.
Matrix said the sale of Rennie presents an ideal opportunity for a strategic or individual buyer seeking to grow in the convenience store and motor fuels distribution industry. For a strategic buyer seeking to acquire multiple locations, it is also possible that a major oil company would be willing to rebrand the locations in exchange for a long-term supply agreement, according to the statement released by Matrix.
According to the preliminary sale procedures, which are subject to approval by the court, bids can be submitted on individual stores and/or supply agreements; a combination of stores and/or supply agreements; or for all of the stores and/or supply agreements.
All bids must be submitted on or before 5 p.m. EDT on Sept. 21 or such other deadline approved by the court. Bidders submitting qualified bids, as defined in the sale procedures motion and an Order of the Court approving the sale procedures, will be invited to the auction to be held in Richmond, Va., on Oct. 2.
To receive a bid package or for more information on the stores and the bidding and auction process, visit Matrix Capital Markets Group Online website, www.matrixcapitalonline.com/index.html, or contact Cedric Fortemps at 804-591-2039.