United Fuel Completes SC Fuels Transaction
Broadens footprint; intends more acquisitions
MIDLAND, Texas -- United Fuel & Energy Corp., a distributor of gasoline, diesel, propane and lubricant products to customers in the markets of the southwestern and southcentral United States, said that it has completed the acquisition of Cardlock Fuels System, Inc., the cardlock operations of SC Fuels. The acquired operations include 23 unattended fueling facilities located throughout Southern California and a fleet fuel cards business with more than 43,000 cards distributed.
Based in Orange, Calif., SC Fuels is privately owned by Frank Greinke. [image-nocss] As consideration for the acquisition, United Fuel has issued 24.6 million shares of United Fuel & Energy common stock to Frank Greinke at a price of $1.50 per share. The shares carry certain limitations on voting for one year.
With the closing of the transaction, United Fuel & Energy now has 39.4 million shares of common stock issued and outstanding. On a fully diluted basis, accounting for the conversion of all outstanding preferred shares, Frank Greinke owns or controls approximately 52% of the company, based on 47.6 million diluted shares. Additionally, in a related transaction, United Fuels Investment LP (an SC Fuels affiliate) has agreed to acquire 450,000 newly issued common shares at a price of $1.51 per share.
Effective with the closing, Frank Greinke has become the chairman of United Fuel & Energy. Tom Kelly will continue as a director of the company and assume the title of vice chairman and founder of United Fuel.
We are working closely with Frank to integrate this highly profitable operation into our business, said Chuck McArthur, United Fuel & Energy's president and CEO. In fact, we are already benefiting from Frank's extensive knowledge of the fuel distribution industry as he helps us maximize our opportunities. We appreciate the confidence he has demonstrated in our business strategy and future opportunities by completing the transaction on an all stock basis.
He added, Through this combination, we have broadened our footprint in the western U.S., diversified our offerings into urban markets, enhanced our operations to further increase efficiencies and substantially increased the size of our company to provide a bigger platform from which to grow. Due to the accretive nature of this transaction and the anticipated positive impact from several other acquisitions that we have integrated into the company in 2007, we are expecting much improved results in 2008. We are continuing to analyze the financial impact of this acquisition and will be able to provide a clearer picture of our future financial expectations in our third-quarter earnings announcement.
United Fuel & Energy, Midland, Texas, is engaged in the business of distributing gasoline, diesel, propane and lubricant products primarily in certain markets of Texas, California, New Mexico, Arizona and Oklahoma. It represents the consolidation of numerous companies, including Eddins-Walcher Co. and Cardlock Fuels System. United Fuel intends to continue to expand its business through strategic acquisitions and organic growth initiatives.
United Fuel currently engages in the following activities: Cardlock operation (unattended re-fueling of commercial vehicles), wholesale fuels and lubricants (to commercial customers) and propane distribution (to commercial and residential users). It conducts its operations through more than 25 branch locations and more than 100 cardlock (unattended) fuel sites.