Business Context and Reporting Period
This Form 8-K, dated November 19, 2019, reports a material change in control for CrossAmerica Partners LP (CAPL). The filing details the consummation of an acquisition by investment vehicles controlled by Joseph V. Topper, Jr., the Partnership's founder, from CST Brands, LLC (an indirect subsidiary of Alimentation Couche-Tard Inc.). The report also covers the execution of a related asset exchange agreement with Circle K Stores Inc. and significant changes to the Board of Directors and executive management.
Key Financial Metrics and Agreements
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, or margins for a specific reporting period. Instead, it focuses on the financial terms of the following material agreements:
- Acquisition Purchase Price: The purchase price for the General Partner Membership Interests was $0.5 million in cash paid by Lehigh Gas GP Holdings LLC.
- Ownership Stake: Following the transaction, Joseph V. Topper, Jr. and his affiliates beneficially own 14,905,566 common units, representing 43.3% of the Partnership.
- Asset Exchange: CAPL agreed to exchange 100% of its units in CST Fuel Supply LP (representing 17.5% of outstanding units) for 45 owned/leased convenience store properties, related assets, and wholesale fuel supply contracts covering 387 additional sites from Circle K. Closing is expected in Q1 2020.
- Debt and Liquidity: The Partnership amended its Credit Agreement to permit the acquisition and the exchange. No specific debt balances or liquidity figures are disclosed in this filing.
Material Changes Versus Prior Period
The filing documents a fundamental shift in corporate control and governance:
- Change in Control: Control of the Partnership transferred from Alimentation Couche-Tard Inc. (via CST Brands) to entities controlled by Joseph V. Topper, Jr.
- Board Composition: Four directors affiliated with Couche-Tard (Timothy A. Miller, Jean Bernier, Claude Tessier, and Gerardo Valencia) resigned. Four new directors were appointed: Charles Nifong, Keenan Lynch, Kenneth G. Valosky, and Maura Topper.
- Executive Leadership: Charles Nifong was appointed President and CEO. Jonathan E. Benfield was appointed Interim CFO. All previous officers resigned.
- Agreement Terminations: The Prior Omnibus Agreement with Dunne Manning Inc. and a Voting Agreement involving Joseph V. Topper, Jr. were terminated.
Guidance, Outlook, and Risks
Outlook and Management Commentary:
- The Exchange Agreement with Circle K is expected to close in the first calendar quarter of 2020, subject to customary conditions.
- A Transitional Omnibus Agreement ensures Circle K continues to provide management and administrative services until the Exchange closes or until June 30, 2020.
- The acquisition accelerates the vesting of 44,462 phantom stock units, converting them into common units.
- Environmental Liability: Under the Environmental Responsibility Agreement, Circle K retains liability for known contamination, while CAPL assumes liability for unknown environmental contamination at the acquired properties.
- Forward-Looking Statements: The filing includes standard disclaimers that actual results may differ materially from projections regarding the benefits and timing of the transactions.
Investor Verification Checklist
- Verify the final closing date and consideration for the Exchange Agreement with Circle K (expected Q1 2020).
- Review the full text of the Amendment to the Credit Agreement (Exhibit 10.1) for specific covenants and financial maintenance requirements.
- Monitor the transition of management services from Circle K to the General Partner under the Transitional Omnibus Agreement.
- Assess the impact of the 43.3% ownership stake held by Joseph V. Topper, Jr. and affiliates on future corporate strategy and related-party transactions.
- Confirm the status of the 44,462 phantom stock units converted to common units and their impact on dilution.