Business Context and Reporting Period
This Form 8-K Current Report, dated May 21, 2019, covers CrossAmerica Partners LP (the "Partnership"). The filing announces the closing of the first tranche of an Asset Exchange Agreement previously entered into with Circle K Stores Inc. ("Circle K") on December 17, 2018. Circle K indirectly owns 100% of the Partnership's General Partner and provides management services.
Key Financial Metrics and Transaction Details
The filing details a specific asset exchange transaction rather than providing standard periodic financial statements (e.g., revenue, net income, or cash flow for a fiscal period). Key transaction values include:
- Assets Acquired: 60 U.S. company-operated convenience and fuel retail stores (52 fee, 8 leased) from Circle K with an aggregate value of approximately $58.1 million.
- Assets Disposed: 17 Upper Midwest properties and the real property for 8 master lease properties transferred to Circle K with an aggregate value of approximately $58.3 million.
- Net Cash Impact: The filing does not explicitly state the net cash consideration exchanged, noting only the aggregate values of the assets transferred.
Material Changes Versus Prior Period
The primary material change is the execution of the "First Asset Exchange" on May 21, 2019. This transaction alters the Partnership's asset portfolio by removing 25 properties (17 Upper Midwest + 8 master lease real properties) and adding 60 new stores. The Partnership expects the remaining tranches of the Asset Exchange Agreement to be completed by the end of the first quarter of 2020.
Guidance, Outlook, and Related Agreements
Sub-Jobber Agreement: Concurrent with the asset exchange, Lehigh Gas Wholesale LLC (a wholly-owned subsidiary of the Partnership) and Circle K entered into a Sub-Jobber Agreement. Under this agreement, Circle K will supply all motor fuel requirements for the 60 newly acquired stores. The agreement term expires on May 21, 2024, with provisions for temporary extensions.
Outlook: Management anticipates the full series of asset exchanges will conclude by the end of Q1 2020. The filing includes a cautionary statement regarding forward-looking statements, noting that actual results may differ materially from projections due to various risk factors.
Investor Verification Checklist
- Verify the final closing dates for the remaining tranches of the Asset Exchange Agreement expected by Q1 2020.
- Review the full text of the Sub-Jobber Agreement (Exhibit 10.1) to understand termination rights and specific fuel pricing mechanisms.
- Confirm the impact of the asset swap on the Partnership's future distribution coverage and leverage ratios, as specific financial statement impacts are not detailed in this 8-K.
- Monitor the integration of the 60 new stores into the Partnership's dealer network.