CORPUS CHRISTI, Texas -- Susser Holdings Corp. hopes to raise $200 million through the spinoff of its petroleum distribution arm, to be renamed from Susser Petroleum Co. to Susser Petroleum Partners.
In initial public offering (IPO) documents filed with the U.S. Securities & Exchange Commission (SEC) Friday, Susser said the new, public company will "leverage our relationship with [Susser Holdings] in order to generate stable cash flows and provide us with both organic growth and acquisition opportunities."
This correlates with president and CEO Sam Susser's earlier statement that the IPO "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," as previously reported in CSP Daily News(see Related Content below for previous coverage).
Among the ways the spinoff company will "grow through our relationship with" Susser Holdings Corp. (SHC):
*Increasing motor-fuel volumes through SHC's growth in the number of Stripes convenience stores and consignment locations and in volumes at existing Stripes convenience stores and consignment locations. Susser Petroleum Partners will continue to be the sole distributor of motor fuel purchased by existing Stripes convenience stores and consignment locations. "We believe that the SHC Distribution Contract will provide us with substantial opportunities for future volume growth, because per-store motor fuel volumes at SHC's existing Stripes convenience stores grew at a compound annual growth rate of 3.8% from Jan. 1, 2006, through March 31, 2012," the SEC document states. In addition, SHC is required to negotiate with the new company regarding the terms of fuel distribution to any new stores and consignment locations. SHC expects to open an additional 25 to 30 newly constructed stores during 2012 and 28 to 35 newly constructed stores during 2013.
*Executing sale and leaseback arrangements with SHC, which will provide additional rental income and additional wholesale fuel income. "We will have the option to purchase up to 75 Stripes convenience stores at various times during the three years following the completion of this offering under sale and leaseback arrangements. In addition, SHC may offer us the opportunity to enter into similar sale and leaseback arrangements for other SHC convenience stores in the future."
*Pursuing strategic acquisition opportunities with SHC. "We believe that there is considerable opportunity for consolidation in our industry as major integrated oil companies continue to divest sites they own or lease, and independent dealers have experienced pressure from increased competition from nontraditional fuel suppliers, such as Walmart," the document states. "We intend to capitalize on the relationship between our wholesale business and SHC's complementary retail business by jointly pursuing mixed asset acquisition opportunities with SHC [that] may not be attractive to a pure wholesaler or pure retailer."
The new company also intends to expand its third-party wholesale motor fuel distribution business "by expanding our dealer distribution network within our existing areas of operations and in new geographic areas, including by completing acquisitions of distribution contracts from other distributors and executing contracts with existing and new dealers, and adding new commercial customers to our distribution network."
As of March 31, 2012, the Susser Petroleum Co. distributed motor fuel to 481 locations operated by third parties under long-term contracts.
Susser distributes major fuel brands Chevron, CITGO, Conoco, Exxon, Mobil, Phillips 66, Shamrock, Shell, Texaco and Valero.
The SEC document does not include specifics on how many units of stock it aims to offer, the opening price or a date for the IPO.
Merrill Lynch, Pierce, Fenner & Smith Inc. and Barclays Capital Inc. are acting as representatives of each of the underwriters.
Corpus Christi, Texas-based Susser Holdings Corp. is a third-generation, family-led business with approximately 1,100 company-operated or contracted locations. The company operates more than 540 convenience stores in Texas, New Mexico and Oklahoma under the Stripes banner. It offers restaurant service in more than 335 of its stores, primarily under the proprietary Laredo Taco Co. brand. It also supplies branded motor fuel to approximately 565 independent dealers through its wholesale fuel division.
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