"The stores will close as we take possession and will remain closed until another operator commences running the stores," former APPCO CEO Jeff Benedict told the newspaper. Benedict still works with longtime APPCO owner Jim MacLean, who sold the 58-store chain for $30 million to Titan Global Holdings in September 2007.
Another MacLean company, Management Properties Inc., retained ownership of more than two dozen of the store properties during Titan's ownership, leasing them back to Titan. Under Titan, APPCO declared Chapter 11 bankruptcy in February 2009, but MPI retained ownership of those properties, with amended, less expensive leases, after Sunshine Energy took ownership.
Florida Sunshine Investments, primarily owned by Florida billionaire Jeff Greene, purchased APPCO, paying $6.25 million for 47 stores and more than 100 dealer contracts, as part of the bankruptcy resolution.
(Click here for previous CSP Daily News coverage of the APPCO saga.)
Attempts by the Johnson City Press to reach Sunshine Energy officials through APPCO's highest-ranking local executive, Rick Jones, were unsuccessful. Jones said he could not comment on the matter.
The lives of APPCO store employees have involved a "topsy-turvy ride" that started with vanishing store inventories and empty gasoline pumps in late fall 2008 as Titan faced financial trouble, said the report. That was followed by the uncertainty of a bankruptcy proceeding, and then hope when the apparently well-capitalized Sunshine bought APPCO, and disappointment as the results of that purchase have not met expectations, the report added.
One store manager said the lack of funding has resulted in overworked employees and the company living on the edge with its vendors, much like it did in the weeks leading up to the bankruptcy. "We're having to pay Pepsi, Coke and the beer vendors on a cash up front basis, and business has been really slow," the manager told the paper. "They told us yesterday we had to cut payroll hours again."
Benedict said the current process could have been avoided had Sunshine Energy paid its rent, paid property taxes on the stores and kept the buildings in decent repair, said the report. MPI locked the doors on APPCO No. 8 Wednesday morning, and Benedict said the process leading up to such drastic action has been disappointing to him as well. "When Sunshine took over the stores, we hoped that they were financially responsible. Unfortunately, it appears that they, like Titan, are undercapitalized. They have been chronically late in their rent payments."
He added that Sunshine still owes its May and now its June rent. "They have neglected the maintenance of the buildings, and they have yet to pay the 2009 real-estate taxes as is required by the lease," Benedict told the paper.
After several months of trying to resolve the situation, including writing Sunshine representatives a half-dozen letters detailing the problems, sending pictures of deteriorating store conditions including leaking roofs and sending copies of tax notices, MPI took the matter to court in April, Benedict said. "None of this should be a surprise to them," he told the paper.
Benedict said he was unsure how long it would take for MPI to close the rest of the properties, and added that he is hopeful the situation can be resolved either with Sunshine or with potential new operators with whom MPI principals have been negotiating in recent weeks. "I've discussed that prospect with a number of interested parties and there are some viable possibilities," Benedict told the Johnson City Press.
He said he hopes some of the store employees, a number of whom have been with the company since his days as CEO, will somehow be able to work at those stores again. "Whoever takes over the stores will need the managers and other employees, and if they're available, I suspect those people will be able to easily find a job with the new operators," he said.
Benedict did note that MPI is still giving Sunshine a chance to make amends before too many more stores close. "We are in discussions with them about the possibility of resolving this," he said.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.