CORPUS CHRSTI, Texas -- Susser Holdings Corp., an operator of Circle K and Stripes convenience stores, is preparing to go public this week with an initial public offering (IPO) of six million shares, expected to be priced between $16and $18, said the Associated Press.
Underwriters may purchase up to an additional 900,000 shares. There will be about 15.3 million shares outstanding after the offering. Susser plans to use the expected $93.3 million in proceeds to redeem $50 million in senior notes, plus about $5.5 million in accrued interest, to repay all [image-nocss] outstanding borrowings under its revolving credit facilityabout $11.4 millionand for general corporate purposes including growth capital.
Key investors are private equity investment company Wellspring Capital Partners III LP, with which will own 6.6 million shares after the offering, and company president and CEO Sam L. Susser, with 2.2 million shares.
The company said its stock has been approved for listing on the Nasdaq Global Market under the ticker symbol SUSS.
Underwriters include Merrill Lynch, JP Morgan, Jefferies & Co. and Morgan Keegan & Co.
The Corpus Christi, Texas-based company operates about 320 c-stores in Texas and Oklahoma, more than 300 of them under the Circle K name. It is also a wholesale distributor of motor fuel to its own stores and other customers.
As reported in CSP Daily News, Susser has begun the process of rebranding all of its c-stores to its own Stripes brand.
Concerning the rebranding, the SEC filing said that the expense of Susser's royalty payments for the Circle K banner outweighs any benefit from the Circle K licensing agreement.
It added, Our prior experience in rebranding from 7-Eleven, Tex Mart, Ice Box and Coastal to Circle K has led us to believe that location, quality and consistency of services offered are more important determinants of customer loyalty than store brand. In addition, we will no longer be limited by the geographic restrictions set forth in the Circle K license agreement.
The company also said in its IPO filing, We plan to pursue acquisition opportunities within the highly fragmented convenience store industry. We will focus on existing and contiguous markets where demographics and overall market characteristics are similar to our existing markets. With approximately 20,000 convenience stores operating in Texas, Arkansas, Louisiana, New Mexico and Oklahoma, we believe there are significant opportunities to further penetrate our existing markets and selectively expand into new markets. This region has been under intense competitive pressure from hypermarkets and other supermarket operators, making the region ripe for continued consolidation as weaker competitors exit the business. In addition, our unique retail/wholesale business model provides us with strategic flexibility to acquire chains with both retail and dealer locations.
For the complete story of Susser's plans post IPO, see the October issue of CSP magazine or click here.
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