Business Context and Reporting Period
CrossAmerica Partners LP (CAPL) filed this Form 8-K on April 14, 2020, to report the completion of an asset purchase agreement entered into on January 15, 2020. The transaction involved the acquisition of retail operations at 169 sites, wholesale fuel distribution to 110 sites (including 53 third-party wholesale dealer contracts), and leasehold interests in 62 sites.
Key Financial Metrics and Transaction Details
- Total Consideration: $36 million (exclusive of inventory and in-store cash).
- Payment Structure: Approximately $21 million in cash and 842,891 newly issued Common Units valued at $15 million.
- Unit Valuation: Based on a volume-weighted average trading price of $17.80 per Common Unit for the 20-day period ended January 8, 2020.
- Financing: The cash portion was financed through borrowings under the Partnership's credit facility.
- Ownership Impact: Following the issuance, Joseph V. Topper, Jr. and controlled entities beneficially own approximately 48.9% of outstanding Common Units.
Material Changes and Terminations
Upon consummation of the transaction, the Partnership terminated its existing contracts with Dunne Manning Stores LLC ("DMS"), a seller affiliated with Mr. Topper. Consequently, DMS is no longer a customer or lessee of the Partnership.
- Wholesale Fuel Supply: The 15-year PMPA Franchise Agreement, making CAPL the exclusive fuel distributor for DMS sites, was terminated effective April 14, 2020.
- Lease Agreement: The master lease agreement with DMS, effective since June 1, 2014, was terminated effective April 14, 2020. CAPL no longer receives real estate rental income from DMS.
Outlook, Risks, and Related Party Transactions
The transaction was approved by the Board's Conflicts Committee, which retained independent legal and financial advisors. The filing highlights significant related party aspects:
- Related Party Issuance: The 842,891 Common Units were issued to entities controlled by Mr. Topper.
- New Agreements: The Partnership entered into customary triple-net ten-year master leases with certain affiliates of Mr. Topper.
- Adjustments: The cash portion of the purchase price is subject to customary post-closing adjustments pending satisfaction of conditions.
The filing text does not provide specific forward-looking guidance, revenue projections, or liquidity metrics beyond the transaction financing details.
Investor Verification Checklist
- Verify the final post-closing cash adjustment amount against the initial $21 million estimate.
- Confirm the impact of the DMS termination on future wholesale fuel volume and real estate rental revenue.
- Review the terms of the new triple-net leases with Mr. Topper's affiliates for rent obligations and duration.
- Assess the utilization of the credit facility for the $21 million cash payment and its effect on debt covenants.
- Monitor the dilution impact of the 842,891 new Common Units on existing unitholders.