RICHMOND, Va. -- With a big infusion of cash, convenience-store company GPM Investments LLC is growing its fuel distribution business as well as looking at funding potential acquisitions.
As reported in a McLane Co./CSP Daily News Flash, GPM has closed on a $70 million minority private-equity investment by an investment company concentrating in the energy sector into a wholly owned subsidiary of GPM.
This subsidiary will purchase motor fuel from major integrated oil companies and independent refiners and distribute fuel to GPM at a fixed margin.
GPM has also arranged a credit facility with $110 million of availability and a $110 million accordion to fund acquisitions, it said.
The investment company has asked that its name not be shared at this time, according to Raymond James & Associates Inc., which served as sole financial advisor to GPM on the equity private placement and credit facility.
Arie Kotler, president and CEO of GPM, said, "We are delighted to announce this equity raise from a strong partner for our newly-operating subsidiary. GPM is now in an even stronger position to continue its acquisition growth strategy in the convenience store and wholesale fuel distribution sector. This is an exciting transaction for everyone involved and will provide a tremendous capital base for GPM's next stage of growth."
He also noted that “in addition to this infusion of $70 million, we have arranged a credit facility with $110 million of availability and a $110 million accordion to fund acquisitions, subject to obtaining additional commitments from lenders or other banks.”
In April 2015, GPM began the process to create a separate fuel distribution arm. GPM Petroleum LP (GPMP), which would become a master limited partnership (MLP) to distribute motor fuel to GPM Investments' convenience stores, filed an initial public offering (IPO) statement with the U.S. Securities & Exchange Commission (SEC).
GPM Petroleum's agreements with GPM Investments include a fuel distribution agreement under which GPM Petroleum would distribute most of the motor fuel purchased by GPM for sale to its existing convenience stores, independent and lessee dealers and consignment locations at cost, plus a fixed fee of 4.5 cents per gallon for a period of 10 years, in addition to future volumes.
Richmond, Va.-based GPM is one of the largest privately owned companies in the convenience-store channel, operating 665 company stores, as well as more than 100 dealer locations. It operates or supplies stores in Connecticut, Delaware, Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee and Virginia. Along with Fas Mart and Shore Stop, GPM convenience-store brands include Scotchman Stores, Young's, Li'l Cricket, BreadBox and One Stop, as well as Road Ranger.
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