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Monday, August 10, 2009

On the Block: An Insider's View of Selling a Chain

Source: Convenience Store News
By Barbara Grondin Francella

August 10, 2009 - For a variety of reasons, including a maturing industry and hardships brought on by the recession, many c-store operators are looking to exit the industry. One, Appalachian Oil Co. (Appco), was placed on the block after filing for Chapter 11 protection in February.

NRC Realty Advisors, which is handling the sale, has worked through the spring to build a consensus among the various Appco constituencies, including landlords, senior lenders and the committee of unsecured lenders, according to Andy Webber, Appco's chief restructuring officer, as well an officer of NRC and founder of Corner Capital Partners LLC, which provides investment banking services tailored to the c-store/petroleum marketing industry.

CSNews recently talked to Webber about selling a c-store chain in this economic climate.

CSNews: What advice would you have for those looking to sell c-stores now?

Webber: While things were very slow in 2008, we have seen a pickup in activity in the past three months, with various retailers investigating the sale process. Additionally, we have had several transactions close recently, with most of the financing coming from local or regional banks that have had established relationships with strong, local operators.
The days of large, high leverage loans are gone, and the market has retracted to a traditional lending environment driven by personal relationships. But the environment today has changed from six months ago, and there is a little more liquidity in the market for transactions. Banks have to lend money to make money, and for quite a while, they were simply frozen.

CSNews: Are buyer's difficulties getting financing and the extra time it may take to close a deal affecting sellers?

Webber: Sellers should be aware the days of closing transactions in 30 days are gone. However, LTVs (loan to value) are in the traditional historical range and lenders are interested in making loans. Sellers need to realize timing for transactions is prolonged and patience is required.

[Still,] good assets can be sold today within their historical multiple range. Sellers can assist in their sale prices by participating in the future success of the company, which allows for a more flexible transaction structure.

CSNews: How creative are buyers getting in terms of finding financing?