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DURHAM, N.C. -- Created as a muscular roll-up company to consolidate a fragmented southeastern convenience market, Swifty Serve Corp. now appears headed to bankruptcy court, Convenience Store News has learned.
"We are looking for cooperation and we're all on the same team, whether it's with our lenders or our vendors," said Jeff Hamill, who took over as the chain's president and CEO in April.
In an exclusive interview with CSNews Online, Hamill confirmed the company's struggles to cut significant debt. Swifty Serve, which ranked 24th with 520 stores in the Convenience Store News list of Top 50 Companies just a few months ago, has shuttered 70 units in recent weeks to drop its store count to 450.
Additionally, Hamill said, the chain has closed several administrative offices and eliminated about 15 percent in administrative payroll.
According to three sources familiar with the company's operations, Swifty Serve is expected to file for bankruptcy within the next few days. Additionally, the sources said distribution to Swifty Serve stores by McLane Co. Inc., its primary grocery distributor, and Citgo Petroleum Corp., its largest fuel partner, has been disrupted.
Representatives from McLane declined to comment on the company's relationship with Swifty Serve. Citgo representatives in the Southeast that handle the Swifty Serve account could not be reached for comment.
Asked whether the company has filed for Chapter 11, Hamill said. "We have not filed bankruptcy. That's just a rumor."
He did say that the company is negotiating with its primary lender, GE Capital, and its inventory financier CIT. "It's not a secret that gas and CPGs (consumer packaged goods) are down. We've had a couple of efficiency moves where we have consolidated some markets.
"When I came here from 7-Eleven, this organization had some hierarchy and needed to get closer to the store level," he added. "We've made some good moves. There is a lot of money saved, about a 10 to 15-percent reduction in overhead."
However, one source described Swifty's financial situation as much more serious. "They've already shut down administrative offices in Tallahassee, Atlanta and New Orleans." The same source added that Swifty's co-chairmen, Clay Hamner and Wayne Rogers, are no longer with the company, though that has not been confirmed. Calls to Hamner were not returned Tuesday morning.
The transformation from a once dynamic chain echoes the pattern of similar companies that have crashed in a dismal economy. The list includes chains such as Convenience USA, Fas Mart Convenience Stores Inc., Dairy Mart Convenience Stores Inc. and Duke & Long Distributing.
Only a few years ago, Swifty Serve stood among the most aggressive merger-and-acquisition companies in the c-store sector, gobbling up such notable outfits as Country Cupboard, Time Saver and Pepco.
Heavily leveraged, Swifty relied on a business model driven by high-margin gasoline and, to a lesser extent, in-store sales of high-profit items like fountain beverages and pre-packaged foodservice.
But increased competition from hypermarkets and other c-store chains, along with tighter lending, have bludgeoned petroleum margins and undercut in-store sales. While greater outside competition has taken a toll on the entire c-store industry, it has decimated companies dependent on fuel.