CHARLOTTE, N.C. -- With the agreement to acquire Appalachian Oil Co. (APPCO), as reported yesterday in a CSP Daily News Flash, NewGen Technologies Inc. hopes to position its ReFuel America subsidiary to become a fully integrated manufacturer and distributor of biofuels.
ReFuel America, with fuel terminals in North Carolina, South Carolina and Georgia, will gain additional biofuel distribution to a large existing customer base at APPCO's more than 200 retail gas stations and independent wholesale dealers.
The APPCO acquisition [image-nocss] gives ReFuel the ability to deliver biodiesel and ethanol blends to customers in six states.
Blountville, Tenn.-based APPCO operates 58 company-owned stations with convenience stores and supplies petroleum products to more than 160 other independent dealers. APPCO sells to wholesale and retail customers in Tennessee, Kentucky, Virginia, West Virginia, North Carolina and South Carolina. Its branded products include Exxon, BP, Marathon, Sunoco, CITGO and its own APPCO brand.
In the 12-month period ended Sept. 30, 2006, APPCO had revenue of more than $400 million, distributes more than 225 million gallons of fuel products and employs more than 500 employees.
The agreement provides for the acquisition by NewGen of all of APPCO's stock for an undisclosed purchase price. NewGen is currently finalizing the terms of its financing arrangements for the APPCO acquisition. Subject to the satisfaction of the closing conditions described above, the acquisition is expected to be completed in first-quarter 2007.
The completion of the acquisition is subject to customary closing conditions, including completion of satisfactory legal and financial due diligence and the completion of an audit of APPCO's financial statements.
APPCO buys fuel products directly from secure pipelines originating at the refineries of the major oil companies and independent refiners. APPCO buys ethanol in bulk from regional manufacturers and blends it with its hydrocarbon petroleum products.
Given the convergence of its direct fuel buying, multiple distribution locations and diverse product mix, APPCO achieves higher profit margins and enjoys competitive advantages in the markets it serves, according to the company.
NewGen is delighted with this acquisition as there is a tight synergistic fit, including strong management, reflecting a solid value for our shareholders and providing ReFuel America with much greater scale for fuel distribution. Our previous terminal acquisitions began to achieve these goals, and the APPCO acquisition will greatly advance these objectives, said Bruce Wunner, Charlotte, N.C.-based NewGen's vice chairman and CEO. As we continue to implement our Fields to Wheels' mission, we are looking to explore similar strategic opportunities as they become available.
And Michael F. D'Onofrio, NewGen's COO, said, APPCO's management team has been very successful and will continue working with us to build the APPCO and ReFuel America division. We will exploit opportunities to use the enhanced fuel performance expertise of NewGen to expand product lines and revenue through APPCO's established distribution channels.
APPCO did not return calls for comment by presstime.
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