The bankrupt Appco convenience store chain has found a buyer out of Florida and hopes to close by next week on a $6.25 million deal that will preserve employees’ jobs at 47 stores.
Appco’s bankruptcy attorney, Mark Dessauer, filed a motion late Tuesday asking that the sale be approved and calling the offer “the highest and best bid for the assets of (Appco).” The bidder, Florida Sunshine Investments, also would pay for Appco’s inventory in the deal.
Appco’s chief restructuring officer, Andy Weber, was appointed by the court April 14 and charged with selling the company. Tuesday night, he called the retention of the roughly 350 employees a big plus.
“Selling the company has been a long and difficult process, but the managers and employees in the retail division have done an admirable job of focusing on their mission during that time,” said Weber, of NRC Realty and Capital Advisors, which oversaw the sales process.
The Chicago-based company specializes in, among other things, sale of distressed commercial assets.
“I’m pleased that we’ve found a buyer who recognizes the value loyal and experienced store employees bring to the convenience store business. If this sale is approved as I hope and expect it will be, I’ll be happy knowing that those jobs were preserved.”
If approved, the sale would come nearly two years to the day after a Texas-based company, Titan Global Holdings, paid longtime Appco owner Jim MacLean $30 million in a leveraged buyout. At the time, Appco had about 55 convenience stores in Northeast Tennessee, Southwest Virginia and Southeastern Kentucky, and provided gas to more than 160 independent stores.
In late 2008, Appco began having trouble supplying gas to its independent dealers, and after Titan failed to arrange refinancing of its debt, Appco filed Chapter 11 bankruptcy Feb. 9. Even the Appco stores spent close to two months in January, February and March without gas and many essentials, and they haven’t had lottery tickets since the beginning of the year.
Appco’s bankruptcy case has been full of twists and turns, and Tuesday’s motion revealed that the last few weeks were no different.
Florida Sunshine Investments made a late offer on the company after another bidder — Empire Petroleum Holdings of Rockville, Md. — had lowered its initial $9.1 million bid to $5.5 million saying Appco’s financial information discovered in due diligence was unacceptable. Empire agreed to a stipulation then that Appco could seek other offers and accept any that exceeded the $5.5 million bid by 5 percent or more. The new bid is about 14 percent higher.
Florida Sunshine Investments’ bid is subject to Judge Marsha Parsons’ approval and would require her to approve an amendment to the sales procedures, since the company didn’t enter the picture until Aug. 18 — weeks after the initial July 8 bid deadline. The motion filed Tuesday indicates that Empire still has an opportunity to make a counter offer.
In another interesting note, Florida Sunshine Investments also put in a successful bid on another oil company that Titan briefly owned before it, too, went into bankruptcy. When Titan announced last fall it was buying Independence, Kan.-based Crescent, it said Crescent and Appco would become successful sister companies and help one another grow.
An article on last week’s purchase of Crescent Oil by Florida Sunshine Investments in trade publication CSP News says that the company is backed by Florida billionaire Jeff Greene. In it, the company’s president, Bret Berlin, said it is the company’s first venture into the energy field and that it will revamp Crescent’s stores and brand them as “Sunshine Energy.”
Berlin also told CSP News “we’re in acquisition mode and looking to acquire other sites and other companies.”
Based on the sale price, it appears Appco’s many unsecured creditors, who collectively are owed more than $7 million, will get at most a little more than $1 million of that money. Titan’s lender and the secured creditor, Greystone Business Credit, is owed more than $11 million, but an agreement provides for some “carve outs” for the unsecured creditors.
Based on the deal, they will get $750,000 from a $1 million escrow fund that would have gone back to MacLean and Appco’s other original sellers, plus a portion of the sales proceeds based on a formula. At $6.25 million, that amount should total $340,000, bringing the total to $1,090,000, or around 15 cents on the dollar, depending on how the committee for the creditors chooses to disburse that money.
Appco has asked that Parsons hear the motion to sell the company on Tuesday.