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CORPUS CHRISTI, Texas -- Susser Holdings Corp. will spin off its legacy wholesale fuels business into a master limited partnership (MLP). The MLP will be called Susser Petroleum Partners LP, and will trade on a public stock exchange following an initial public offering (IPO), Susser Holdings confirmed this afternoon.
Susser's convenience store operations will remain under the parent company's umbrella.
"Creation of this MLP gives us the potential to realize value for our shareholders from our wholesale business that we believe is not being recognized in the market today," said Sam L. Susser, president and CEO of Susser Holdings. "We believe this transaction will allow us to de-lever the convenience store portion of our business, reduce our cost of capital and further diversify our access to capital to fund our growth strategy."
According to Susser Holdings, it will own the general partner of the new entity, as well as all of the MLP distribution rights and a majority of its units representing limited partner interests. Once Susser Petroleum Partners becomes a public entity, Susser Holdings will be paid the net IPO offering proceeds. The amount Susser Holdings will receive and the date of the IPO have not yet been determined.
However, once received, Susser stated in a news release that it will use the proceeds to "construct or acquire new convenience stores and to repay, repurchase or redeem outstanding debt."
To become an MLP, a company must generate at least 90 percent of its income from what the Internal Revenue Service calls "qualifying" assets. The production, processing or transportation of oil are three things deemed as qualifying assets.
Susser Holdings Corp. operates more than 540 convenience stores in Texas, New Mexico and Oklahoma under the Stripes banner.