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Thursday, August 27, 2009

Ray of Sunshine for Appco

Sale nears finalization, but another bidder, Empire, could make counteroffer
Source: CSP Daily News

BLOUNTVILLE, Tenn. — In a sudden change of direction, Appalachian Oil Co. Inc. (Appco) will now be sold to a single buyer rather than broken up for several purchasers. The Appco chain in eastern Tennessee, in bankruptcy since early this year, is slated to be sold to Florida Sunshine Investments I Inc., Coral Gables, Fla., the same company that recently bought Appco's sister-company Crescent Oil Co. Inc., Independence, Kansas. The announcement was made by Denny Ruben, managing director of NRC Realty & Capital Advisors LLC, Chicago, which is handling the Appco sale under direction of the bankruptcy court.

As reported in a CSP Daily News Flash yesterday, Appco's bankruptcy attorney, Mark Dessauer, filed a motion late Tuesday asking that the sale to Florida Sunshine Investments be approved. The motion called the offer of $6.25 million plus cost of inventory "the highest and best bid for the assets of [Appco]." Florida Sunshine Investments' bid is subject to Judge Marsha Parsons' approval.

Appco has asked that Parsons hear the motion to sell the company next Tuesday, September 1. The deal would safeguard employees' jobs at the 47 company-owned stores in the sale. Appco's Chief Restructuring Officer, Andy Weber, senior vice president at NRC, was appointed by the court April 14 and charged with selling the company. He called the retention of the approximately 350 employees a big plus and a priority.

"Throughout the sale there have been multiple, week-to-week twists and turns. Drawing on NRC's expertise in handling divestitures of distressed assets has allowed us to continue operations to reach a successful exit on behalf of the creditors," said Weber.

Florida Sunshine Investments' president, Bret Berlin, told CSP Daily News, "We're in acquisition mode and looking to acquire other sites and other companies." (Click here for coverage.)

If approved, the sale would come nearly two years to the day after a Texas-based company, Titan Global Holdings, paid longtime Appco owner Jim MacLean $30 million in a leveraged buyout, added a report by The Kingsport Times News. At the time, Appco had about 55 stores in northeastern Tennessee, southwestern Virginia and southeastern Kentucky, and provided gasoline to more than 160 independent stores.

In late 2008, Appco began having trouble supplying gasoline to its independent dealers, and after Titan failed to arrange refinancing of its debt, Appco filed Chapter 11 bankruptcy on February 9.

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