Headlines

November 10, 2009
Shell Forced to Rework Sales Plan for 100-Plus East Coast Sites

Shell has pulled the plug on a much-bedeviled plan to sell 114 or so of its stations in New Jersey and will now re-offer them in smaller packages, Oil Express learns.
  
Shell had reached an initial agreement to sell the outlets to New Jersey Petroleum, a limited liability firm established for the purpose by minority business executives, former IBM executives George Martin and Robert James. Shell originally hoped to close the deal before year-end 2008 in order to avoid a dealer first refusal measure that was then being drafted.
The law, which subsequently passed, applies to sales of 40 or more stations that occur after Feb. 2 this year.
  
Under the original business model, Martin and James planned to use Shell wholesaler Waseem Chaudhary's company, Scranton, Pa.-based Waseem Petroleum, to manage the stations under a contract arrangement. Chaudhary had a 40% stake in the venture but later decided that he wanted to boost it to 51%, sources say.
  
Martin and James balked at the demand and in June had been planning to buy back Chaudhary's slice of the venture and bring in long-time ExxonMobil, BP and Sunoco jobber Harry Singh and his company, Bolla Management Corp., to run the stations, as
reported (OE 06/22/09).
  
However, the two planned to use capital from a British firm but the deal could not be put together. So, now Shell, Chaudhary and the two businessmen are in the process of unwinding their contractual situation. When that's done, Chaudhary, Martin and James will be free to bid again on any of the sites.
  
Shell, meanwhile, has split the stations into four smaller groups. The original asking price for the sites was well in excess of $100 million. The theory is with smaller parcels, marketers may find it easier to finance acquisitions.

Shell, which now will have to give retailers first refusal sites on the stations, is expected to put the 70 or so lessee dealer sites into separate packages, and 40 outlets run by multi-site operators (MSO) into a different parcel. The Petroleum Marketing Practices Act does not apply to MSO retailers.

  


November 4, 2009
Irving Widens Brand in Western New England, Upstate New York

Irving Oil intends to continue expanding across the northeast and suggested today that its newest distributor, Vermont-based R.L.Vallee, is a model partner for that expansion.

Irving just signed up the family-run distributor last month. In a press release today, Irving reiterated that it is committed to growing it retail fuel business through distributors and
dealers that "share our values of clean stores, convenient locations and excellent customer service," according to Irving general manager Harry Hadiaris.

R.L. Vallee has approximately 60 owned or supplied locations throughout Vermont and upstate New York, and may be best known for its Maplefields chain of c-stores. The jobber
is constructing a high profile truck plaza in Champlain, New York that should open by
year's end.

Irving now boasts around 800 locations in Atlantic Canada and New England, including leased and independent sites. Sources say that the refiner has been very aggressive in 2009, signing up U.S. distributors and dealers with prices modestly above local rack quotes, or even based on spot indices. It's widely assumed that Irving will bid on some of the branded Mobil stations that are currently up for sale in the northeast.


October 26, 2009
BP Settles Lawsuit With MW Jobber

BP has settled its two-year legal fight with Bulk Petroleum over alleged commingling by the Midwest marketer, currently in Chapter 11 bankruptcy.
  
Under a court-approved agreement, Bulk will  transfer six Louisville, KY, stations to BP for $3.12 million. Three of the stores are vacant and a dealer occupying the other three is to be evicted, according to court records. Bulk will also assign the ground leases on two more sites to the refiner, which will pay $50,000 toward the tax liens on the sites. 
  
BP, meanwhile, will assign to Bulk its security interest in four sites that Bulk had mortgaged, worth an estimated $2.18 million. It will also withdraw a claim for $29.80 million it made against Bulk.
  
Additionally, Bulk will pay $19,400 to another retailer, Royce Adams Oil Co., for BP credit card receipts it owes that company. Royce Adams had sued Bulk and BP in Kentucky to try to retrieve the receipts, which BP had put a hold on as part of its dispute with Bulk.
  
While the complicated deal settles BP's commingling claims against Bulk, the Mequon, Wis.-based jobber remains in Chapter 11 bankruptcy.
  
Bulk used to supply nearly 150 stations in Iowa, Illinois, Indiana, Kentucky, Nebraska, Tennessee and Wisconsin. Along with 28 affiliated companies, it filed for Chapter 11 in February this year.
  
BP terminated Bulk's jobber contract for alleged commingling in November 2007. A week later, Dhaliwal sued BP in circuit court, and BP returned the favor in a federal court, demanding that Bulk be required to debrand 120 BP sites in Illinois, Wisconsin, Indiana, Tennessee and Kentucky (OE 12/27/07).
  
During the course of the case, BP alleged that that Dhaliwal and his wife, who had personally guaranteed Bulk's debts, had transferred assets and contracts to other family-owned entities (OE 02/23/09). Bulk has blamed rising gasoline costs for its financial predicament. Among the company's debtors are Marathon, owed more than $5 million. Citgo, meanwhile, has sued the Dhaliwals personally in hopes of recovering more than $4 million it says it is owed (OE 08/10/09). Bulk's leading creditor, AnchorBank, says it is owed $7.42 million.


September 29, 2009
Exxon Dealers Sue in Pre-Emptive Bid to Block Site Sale

A group of 53 dealers is asking a federal court to stop Exxon selling their stations to a jobber, Oil Express learns. The retailers, all based in Maryland, say they will lose the protection offered by their state's divorcement law if a wholesaler buys their sites.
  
According to the dealers, local jobbers who recently bought sites from ExxonMobil, Shell and BP have imposed "burdens and liens" on the retailers involved. As a result, many of the dealers went out of business and the jobbers now operate their stations as company-ops or through commission marketers.
  
The dealers' suit cites jobbers DAG Petroleum, Eastern Petroleum and Southern Maryland Oil as examples. All three are multi-branded, with no loyalty to a single refiner. Pleading for a preliminary injunction, the dealers say they could be forced to compete with their own landlord and supplier because the state's divorcement law does not apply to wholesalers. The distributor would also be able to set the price they pay for their fuel, they note.
  
Exxon announced in June 2008 that it planned to sell its direct sites to distributors. It is expected to finalize many of its Mid-Atlantic sales early next year, as first reported (OE 09/21/09). Since announcing its plan to divest direct stations, Exxon has refused to engage in any "meaningful discussion" with the dealers, and has rejected invitations to sell them their stations, the suit says.
  
The retailers hope that by going to court they will be able to buy time while they work on their second attempt in a year to get a first refusal law through the state legislature. Even if they ultimately lose in court, they may be able to hold up the sale long enough to get state lawmakers to derail it, sources say.
  
Federal courts of appeal generally have dismissed legal pleas based on a parade of potential horrors that could befall a litigant. The retailers may hope that by tying their pleas to Maryland divorcement law they will get a different legal outcome.


September 25, 2009
Northeast Jobber Sweeps Bidding for Uni-Marts' Assets in Midwest

Northeast jobber Joe Topper has come out on top again, at least on the bidding to buy c-stores in Ohio owned by Uni-Marts, the five-state chain that filed for Chapter 11 bankruptcy in May 2008.

In all, 207 Uni-Marts sites were put up for sale at an auction in  Wilmington, Del., this week. More than 200 bidders took part in the auction, which lasted nearly 15 hours, according to broker Matrix Capital Markets Group, which managed the auction.

Kwik Pik, LLC, an affiliate of Topper's Lehigh Gas Corp., won the auction for the Ohio assets with a bid of $10 million. The exact number of sites Topper gets for his money could not be determined at press-time but is believed to be about 21 sites. Matrix chief Tom Kelso did not return a call by press-time.

Stores in Pennsylvania and New York were also up for sale. Kwik Pik and 25 other bidders vied to acquire individual units, bidding a total $9.6 million, Matrix says.

The bankruptcy court in September named Kiwk Pik as the official 'stalking horse' bidder for the Uni-Marts' assets, setting a minimum $16.7 million bid for the stores. Of that, $10 million was allocated for sites in Ohio and $6.7 million for units in Pennsylvania and New York.  The $19.6 million final purchase price represents a 17% improvement on the 'stalking horse' bid.

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Oil Price Information Service (OPIS) is the world's most comprehensive source for petroleum pricing and news information and now has offices in Europe and Singapore. OPIS is the most widely accepted U.S. fuel price benchmark for supply contracts and competitive positioning. OPIS thoroughly covers pricing, analysis and news for gasoline, diesel, ethanol, biodiesel, LP-gas, jet fuel, crude, propane, feedstocks, resid, and kerosene. Through its subsidiary, Axxis Software, it also provides leading-edge software solutions for petroleum marketers looking to automate price collection, data storage and repricing of dealer and commercial accounts. Visit www.opisnet.com or call 888-301-2645 for more information.

 

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