BLOUNTVILLE, Tenn. -- The moment that sticks out in Appalachian Oil CEO Marty Anderson's mind as the point of no return for the company "was last fall when gas prices plummeted," he told CSP Daily News in an exclusive interview. "It decimated our collateral base, and that's when it all started to unravel."
Now that the company is likely to be sold following a ruling in bankruptcy court, it is evident that Appco's story is not unfamiliar to gasoline wholesalers and retailers. "We had an asset-backed revolver [on our credit] that, when the price of fuel plummeted, [image-nocss] our collateral base plummeted with it," Anderson said. "One of our biggest pieces of collateral was our inventory, and the inventory that was worth $4 a gallon all of a sudden was worth $1.50. We didn't have the collateral base to support our asset-backed revolver and the working capital just dried up."
The Blountville, Tenn.-based company filed for Chapter 11 bankruptcy reorganization on February 9, 16 months after Titan Global Holdings, Dallas, took ownership of the company. On Tuesday, U.S. Bankruptcy Court Judge Marsha Parsons named NRC Realty Advisors' P.A. (Andy) Weber as chief restructuring officer for Appco, beginning the process of giving NRC the authority to sell the company and its 58 c-stores in Tennessee and Kentucky.
The irony of the bankruptcy filing is that 2008 was actually "a fantastic year" for Appco, according to Anderson. "Sales were good: Our inside sales were up last year over the previous year's same-store sales. Our gas margins were up. All of our gross profit was up," Anderson said. "We had a great year in that sense on the income side, and our expenses went up because of our lending arrangement. Titan financed this acquisition and was highly leveraged. But in terms of the store operations and sales, it was a fantastic year."
But by the end of the year, Anderson found it difficult for stores to function. "We went almost two months with virtually no fuel and virtually no inventory in the stores. [We had] dry stores and no new merchandise deliveries for almost two months," he said. "I think it was after a court hearing in March that we got a modest amount of DIP (debtor-in-possession) financing from our secured lender and we got the stores geared back up."
Today, Anderson is proud of the progress the company has made in the past month. "All of our stores are wet; all of our stores have the essential convenience store items in them, from tobacco to beer to soda, candy and snacks," he said. "And since March 13, we have continually been ramping up our sales of [gasoline] gallons and inside. We're still in the process, but the trajectory is northward. Every day gets increased sales from the previous day. It's a rebuilding process, and we're a long ways from where we were a month ago."
Click hereto read part 1 of this exclusive interview with Marty Anderson.
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