New Investment, More Stations

Hard economic climate doesn't hinder EZ Energy USA from scooping up 42 sites

Angel Abcede, Senior Editor/Tobacco, CSP

RAMAT GAN, Israel -- EZ Energy Ltd. unit EZ Energy USA Inc. has obtained an investment of $10 million from Investec Bank (UK) Ltd. and a private investor. Mansfield, Ohio-based EZ Energy USA signed a contract to buy a group of 42 gas stations and four lots in the United States for $32.6 million, plus inventory, said Globes Online.

As reported yesterday in a CSP Daily News Flash, when the deal is closed, the company will own 93 gas stations and convenience stores. Though not willing to divulge the name of the chain involved in the current transaction, [image-nocss] Oren Zahavi, vice chairman of Ramat Gan, Israel-based EZ Energy, told CSP Daily News that the deal would most likely close in the first quarter of 2009.

"We are well-positioned to take advantage of opportunities," added Zahavi. Talking about the acquisition in light of the current economic downturn, he said, "Overall, the economy does have an effect on the ability to make transactions, but it's still possible to get financing, and there is less competition bidding on packages and stores."

Investec Bank (UK) and the private investor will initially invest $7 million in EZ Energy USA for a 27% stake in the company, and later invest an additional $3 million for a 7.6% stake. The first investment was made at a company value of $26 million for EZ Energy USA, after money, and the second investment at a company value of $29 million, after money.

The gas stations sell 160 million gallons of gasoline a year and the turnover of the convenience stores is $68 million a year.

In September, EZ Energy USA signed a non-binding memorandum of understanding (MOU) with investors for a three-year loan, convertible into equity, at a company value of $19 million.

The company began its foray into the U.S. market back in July 2007, and since then has made three progressively larger acquisitions in the Ohio-Pennsylvania region.

Last December, Energy USA signed a letter of intent to sell up to 17 gas stations and c-stores in the United States to a real estate investment trust (REIT) for up to $20.7 million. It leased back the properties in a 20-year contract, Zahavi told CSP Daily News at the time. If the company sells all 17 properties, it will pay $1.85 million in annual rent. Zahavi said that he could not disclose the name of the REIT because of a confidentiality agreement.

The properties were previously purchased from BP Products North America Inc. for $15.5 million, according to a report in Globes Online. The locations retained their BP branding, but they will be converted to the oil company's ampm identity, Zahavi said.

Earlier in 2007, EZ Energy's deal to purchase Harper Oil Co. and its 26 On the Ways stores in Springfield, Ill., fell through for unspecified reasons. Zahavi said at the time the company is still very intent on carving a c-store network here in the United States. "We do believe in the long-term viability of the U.S. market," he said at the time. "We can give added value specifically by picking above-average locations that would be here even in times of recession."

Angel Abcede, CSP/Winsight By Angel Abcede, Senior Editor/Tobacco, CSP
View More Articles By Angel Abcede