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    Unable to Find Deep Pocket Partner, Owner Sells Prime Sites

    Fiscal 2005 was a good one for Lee-Moore Oil Co. The company's 21 stores and motor fuel business — it supplied fuel to 20 other locations on a consigned dealer or supply-only basis — generated revenues of $130 million, including $113 million in motor fuels and $l13.5 million in merchandise and car wash sales.

    Fiscal 2005 was a good one for Lee-Moore Oil Co. The company's 21 stores and motor fuel business — it supplied fuel to 20 other locations on a consigned dealer or supply-only basis — generated revenues of $130 million, including $113 million in motor fuels and $l13.5 million in merchandise and car wash sales.

    But volatility in the motor fuel market during the spring of 2005 battered the company's profit statement and ultimately led to Kirk Bradley's exit from the industry.

    "We did a strategic review in late April and May [2005] and realized we needed an equity partner to expand very rapidly or we had to get out of the business," Bradley said. "We had been trying to grow for five years, but it became obvious we wouldn't be able to get far enough, fast enough without an infusion of equity."

    After exploring a number of strategic alternatives throughout the summer, Bradley and his team concluded the company's platform wasn't big enough to do what was needed and they'd be better off exiting the industry.

    "It was a hard decision, because these were very good stores; we just didn't have enough of them," said the third-generation family businessman. "This market is very competitive and very saturated. "We had a lot of great people working for us and wondered what the impact would be on them. Ultimately, we thought all the stakeholders would be better off exiting than if we kept stumbling along, trying to survive, not thrive."

    Selling all the stores to The Pantry Inc., instead of piecemeal, was a more efficient and employee-friendly process, Bradley said. "We came up with a severance package, based on years of service and other factors, with exit dates that allowed people to look for a career opportunity. The higher up in the organization someone is, the harder it is to find an equivalent position, so we wanted to give everyone time to do that."

    Because Lee-Moore's office was virtually next door to The Pantry's North Carolina headquarters, store employees and many office employees were able to transfer. "We got a very fair price, but that wasn't the only consideration," Bradley said. "I don't think we suffered arithmetically for selling to The Pantry and maximizing our other goals. Our sole concern wasn't getting top dollar and leaving a bunch of people in the lurch. That's not our style."

    Lee-Moore initiated sale discussions with The Pantry, and no other companies were knocking on the door. "Maybe because we were on the forefront and innovators, people thought we wouldn't sell, so they didn't approach us. But I think that worked in our favor, working behind the scenes and putting the deal together before the cat was out of the bag."

    The transaction closed in February, and also included dealer fuel supply arrangements for 20 additional stores, but Lee-Moore, now doing business as Lee-Moore Captial Co., kept the real estate. "That was a big consideration," said Bradley. "We had done some real estate development in the past and now that is our sole business. We have a lot of properties and want to find ways to monetize those assets by making them income-producing or selling them."

    Would he consider building more c-stores and getting back into the business? "Never say never," Bradley said. "But not really. I wouldn't do it with just a few stores. It'd have to be a much bigger scale operation."

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