CST Brands & CrossAmerica Announce Dropdown Transactions and Acquisition of One Stop Stores
- Dropdown to CrossAmerica of 29 "New to Industry" stores and 12.5 percent interest in CST's U.S. wholesale fuel supply business
- CrossAmerica agrees to acquire One Stop network of stores in West Virginia
- Transactions to close in the third quarter of 2015
SAN ANTONIO, TX and ALLENTOWN, PA, June 15, 2015 - CST Brands, Inc. (NYSE:CST) ("CST Brands") and CrossAmerica Partners LP (NYSE: CAPL) ("CrossAmerica" or "The Partnership") announced today two dropdown transactions totaling approximately $261.5 million between CST Brands and CrossAmerica. The transactions are expected to close in the third quarter of 2015.
In addition, CrossAmerica has entered into a definitive agreement to acquire the One Stop convenience store network, based in Charleston, West Virginia, that is also expected to close in the third quarter of 2015.
"This is the second dropdown transaction between CST and CrossAmerica and the first to include our New to Industry stores," said Kim Lubel, Chairman and CEO of CST Brands. "In the nine short months since we acquired the general partner of CrossAmerica, the Partnership has executed over one half billion dollars of acquisitions and dropdowns."
Dropdown of "New To Industry" Stores and Fuel Supply
CST Brands has agreed to sell to CrossAmerica the real property associated with 29 recently constructed "New to Industry" ("NTI") stores for an aggregate consideration of approximately $135.5 million. The NTI stores are larger formatted stores that accommodate broader merchandise categories and food offerings and have more fuel dispensers than CST Brands' legacy stores. CrossAmerica will lease the acquired real property to CST Brands at a "triple net" lease rate of 7.5% for a ten year initial term, which will renew automatically at predetermined lease rate increases.
CrossAmerica has also agreed to acquire an additional 12.5% limited partner interests in CST Fuel Supply LP (CST's U.S. wholesale fuel supply business) for total consideration of approximately $126.0 million. CST Fuel Supply LP (and its subsidiaries) provides fuel to substantially all of CST's U.S. company operated convenience stores and largely maintains the fuel supply agreements between CST and its fuel suppliers. CST Fuel Supply LP distributed approximately 1.9 billion gallons of fuel in 2014, and is expected to earn a net profit margin of approximately 5 cents per gallon of wholesale motor fuel distributed.
The aggregate consideration of approximately $261.5 million will consist of $142.0 million in cash and approximately $119.5 million or 3.6 million newly issued common units representing limited partner interests in CrossAmerica.
The independent executive committee of the board of directors of CST Brands and the independent conflicts committee of the board of directors of the general partner of CrossAmerica have, as applicable, approved the terms of the dropdowns of the 29 NTI stores and 12.5% interest in CST Fuel Supply from CST Brands to CrossAmerica.
The conflicts committee of the board of directors of the general partner was advised by Evercore Partners as its independent financial advisor and Richards, Layton & Finger as its independent legal counsel. Paul Hastings acted as legal counsel to CST Brands.
Acquisition of One Stop Network of Stores
CrossAmerica has agreed to purchase the 41 company-operated One Stop convenience store network ("One Stop") based in Charleston, West Virginia, along with 4 commission agent sites, 9 dealer fuel supply agreements and one freestanding franchised quick service restaurant.
Of the 45 company-operated and commission agent sites, 30 are owned fee simple locations. Five of the company-operated locations have quick service restaurants. For the twelve month period ended December 31, 2014, the aggregate 54 sites sold approximately 36 million gallons of motor fuel primarily under the Marathon and Exxon fuel brands, and had approximately $40.5 million in inside sales.
"We are delighted to acquire the One Stop portfolio," said CEO Joe Topper. "Michael Graney, President of One Stop, has built a regional powerhouse organization with a strong basis for future growth. This acquisition further solidifies Cross America's commitment to West Virginia and Virginia," Joe added.
"We are excited to join the CrossAmerica Team and look forward to a bright future for our valued and loyal employees and customers and the communities we serve," said Michael Graney, President of One Stop.
The NTI and fuel drop downs and the One Stop convenience store network acquisition are subject to customary conditions to closing, including financing, and are expected to close in the third quarter of 2015.
About CST Brands, Inc.
CST Brands, Inc. (NYSE: CST), a Fortune 500 Company, is one of the largest independent retailers of motor fuels and convenience merchandise in North America. Based in San Antonio, Texas, CST employs over 14,000 Team Members at nearly 1,900 locations throughout the Southwestern United States, New York and Eastern Canada offering a broad array of convenience merchandise, beverages, snacks and fresh food. In the U.S., CST Corner Stores proudly sell fuel and signature products such as Fresh Choices baked and packaged goods, U Force energy and sport drinks, Cibolo Mountain coffee, FC Soda and Flavors2Go fountain drinks. In Canada, CST is the exclusive provider of Ultramar fuel and its Dépanneur du Coin and Corner Stores sell signature Transit Café coffee and pastries. CST also owns the general partner of CrossAmerica Partners LP, a master limited partnership and wholesale distributor of motor fuels, based in Allentown, Pennsylvania. For more information about CST, please visit cstbrands.com.
About CrossAmerica Partners LP
CrossAmerica Partners, headquartered in Allentown, PA, is a leading wholesale distributor of motor fuels and owner and lessee of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of CST Brands, Inc., one of the largest independent retailers of motor fuels and convenience merchandise in North America. Formed in 2012, CrossAmerica Partners distributes fuel to over 1,100 locations and owns or leases more than 750 sites in twenty-one states: Pennsylvania, New Jersey, Ohio, Florida, New York, Massachusetts, Kentucky, New Hampshire, Maine, Tennessee, Maryland, Delaware, Illinois, Indiana, West Virginia, Virginia, Texas, Minnesota, Michigan, Wisconsin and South Dakota. CrossAmerica also distributes fuel in Georgia and North Carolina. The Partnership has long-term established relationships with several major oil brands, including ExxonMobil, BP, Shell, Chevron, Sunoco, Valero, Gulf and Citgo. CrossAmerica Partners ranks as one of ExxonMobil's largest distributors by fuel volume in the United States and in the top 10 for many additional brands. For additional information, please visit crossamericapartners.com.
Contacts
Investors:
Randy Palmer, 210-692-2160
Karen Yeakel, 610-625-8005
Media:
Lisa Koenig, 210-692-2659
The DeBerry Group
Melissa Ludwig or Trish DeBerry, 210-223-2772
Forward-Looking Statements
This press release and any oral statements made regarding the subjects of this release may contain forward-looking statements of CST Brands and CrossAmerica Partners, which may include, but are not limited to, statements regarding CST Brands' or CrossAmerica Partners' plans, objectives, expectations and intentions and other statements that are not historical facts, including statements identified by words such as "outlook," "intends," "plans," "estimates," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "anticipates," "foresees," or the negative version of these words or other comparable expressions. All statements addressing operating performance, events, or developments that CST Brands or CrossAmerica Partners expects or anticipates will occur in the future, including statements relating to the acquisitions, consideration that may be subject to adjustment, and closing conditions, revenue growth and earnings or earnings per unit growth, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements. The forward-looking statements are based upon CST Brands' or CrossAmerica Partners' current views and assumptions regarding future events and operating performance and are inherently subject to significant business, economic and competitive uncertainties and contingencies and changes in circumstances, many of which are beyond each of the company's control. The statements in this press release are made as of the date of this press release, even if subsequently made available by CST Brands or CrossAmerica Partners on its website or otherwise. CST Brands or CrossAmerica Partners does not undertake any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.
Although CST Brands or CrossAmerica Partners does not make forward-looking statements unless it believes it has a reasonable basis for doing so, the companies cannot guarantee their accuracy. Achieving the results described in these statements involves a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the factors discussed in this report and those described in the "Risk Factors" section of the CST Brands' or CrossAmerica Partners' Form 10-K or 10-Qs filed with the Securities and Exchange Commission as well as in CST Brands' or CrossAmerica Partners' other filings with the Securities and Exchange Commission. No undue reliance should be placed on any forward-looking statements.