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Empire/Quik-Way Merger Platform for Growth

Private-equity investment sets stage for two distributors/retailers

DALLAS & GAITHERSBURG, Md. -- Private equity made another move into the convenience-store arena this week with American Infrastructure MLP (AIM) fund's investment in two retailing and distribution companies that have now merged to create a 170-site chain doing business in 13 states.

Over the past 12 months, AIM has been in talks with Empire Petroleum Partners, Gaithersburg, Md., and the Quik-Way Group, Dallas, about investing it their businesses. The result is a single company in which Empire Petroleum and Quik-Way have merged their operations to create a powerful, multiregional fuel distributor serving more than 530 customers across 13 Mid-Atlantic, Southeastern and Midwestern states, as reported in a Morgan Keegan/CSP Daily News Flash yesterday.

"This is a great opportunity for us and the principals of Empire and AIM to combine into a company that is going to be able to expand and grow," Rick Golman, a managing member of Quik-Way, told CSP Daily News in an exclusive interview. "We now operate in 13 states; we've got just about every [major gasoline] flag [in the distribution arm]. … We have a lot of opportunities out there to grow, and we're very interested in growing."

In addition to the wholesale business, the combined entity also controls the real estate interests in 170 convenience stores and gas stations that span from Maryland to Texas.

For its part, MLP provided Empire Petroleum Partners--as the new combined company will be known--its second major equity infusion and also established a $100 million credit facility to facilitate future growth. The investment enables Empire to accelerate its acquisition plans and expand its services to additional dealers and customers in a broader geographic area.

"AIM invested in Empire and then invested in our [company]," said Golman. "Then AIM consolidated the operations. So our deal really is with a private equity firm, and then merged with Empire and now we are looking for other acquisitions."

The combined company anticipates that this growth will come from investments in other fuel distributors, retail operators, real estate and other petroleum-related infrastructure.

"The Quik-Way assets provide us with substantial scale and allow Empire to immediately expand into the Texas and Louisiana markets," Empire's president and CEO Eli Kimel said in a press release. "With this recent acquisition, Empire will also become a major Shell distributor, which should help fuel additional growth.

"We believe that the industry is in considerable transition, and our goal with Empire is to create a unique and stable fuel distribution platform for which other like-minded operators can prosper together with us."

Added Golman, "Our family has operated Quik-Way and its affiliated companies for over 60 years. We are excited to continue our legacy with Empire, and we look forward to a stronger enterprise with the combined management capabilities and industry experience of both teams."

He said news of the merger was received very positively at Quik-Way. "I think all our management realizes there's going to be great opportunities for everyone. Everybody's very enthused about it," he said. "We have an office here in Dallas, and Empire's office is in Maryland, and we're going to combine, and I think there's an opportunity to create a fabulous company that I think a lot of people are going to be interested in doing business with."

Founded in 1950, Quik-Way is private owner and operator of convenience stores and gas stations throughout Texas and Louisiana. Quik-Way is a major supplier of fuel for Shell, Chevron, Texaco, Valero and ConocoPhillips. In 2008, Quik-Way acquired the retail assets of Motiva (a brand of Shell) in the Dallas Fort-Worth market. The company distributes fuel to more than 230 customers, controls the real estate interests in 87 properties and operates about 100 sites.

Empire Petroleum is a leading motor-fuels distributor of top brands, including Sunoco, BP, Chevron, Marathon, Texaco, Valero, Gulf, and Getty/Lukoil. Based in the Washington, D.C., area, Empire currently distributes motor fuel products to gas stations in 13 Mid-Atlantic, Southeastern and Midwestern states.

And based in Foster City, Calif., the American Infrastructure MLP Fund is a private-equity firm investing in real property, infrastructure and natural resource-related companies. Its strategy is designed to provide unique advantages for the owners, management teams and businesses in which they invest while creating attractive returns and tax-advantaged current income for their investors.

Investment banker Ray Cleeman of Raymond James & Associates, New York, brokered the Empire/Quik-Way deal.

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