Alimentation Couche-Tard and CrossAmerica Announce the Closing of the First Tranche in a Series of Asset Exchanges

Source Press Release
Company Alimentation Couche-Tard IncCrossAmerica Partners LP 
Tags Asset Deals, Deals, Refining & Marketing Activities
Date May 22, 2019
  • Alimentation Couche-Tard Inc. (“Couche-Tard”). has transferred to CrossAmerica 60 U.S. company-operated convenience and fuel retail stores (the “Circle K stores”)
  • CrossAmerica has transferred to Couche-Tard 17 company-operated convenience and fuel retail stores in the U.S. Upper Midwest currently operated by CrossAmerica and the real property for eight U.S. company-operated convenience and fuel retail stores currently leased and operated by Couche-Tard
  • This is the first exchange of assets in a series of transactions announced by Couche-Tard and CrossAmerica in December 2018
  • Each transaction is anticipated to be accretive to CrossAmerica’s distributable cash flow

Alimentation Couche-Tard Inc. (“Couche-Tard”) (TSX: ATD.A) (TSX:ATD.B), through Circle K Stores Inc., its wholly-owned subsidiary (“Circle K”), and CrossAmerica Partners LP (NYSE: CAPL) (“CrossAmerica” or the “Partnership”) today announced an exchange of assets that is the first in a series of transactions under an Asset Exchange Agreement executed in December 2018.  

In December 2018, Couche-Tard announced that it agreed to transfer to CrossAmerica 192 (162 fee and 30 leased) U.S. company-operated convenience and fuel retail stores having an aggregate value of approximately US$184.5 million in exchange for assets having an aggregate value of approximately US$184.5 million. These assets include the real property for 56 U.S. company-operated convenience and fuel retail stores currently leased and operated by Couche-Tard pursuant to a master lease that CrossAmerica previously purchased jointly with or from CST Brands Inc. (the “master lease properties”), and 17 company-operated convenience and fuel retail stores currently operated by CrossAmerica located in the U.S. Upper Midwest (the “Upper Midwest properties”).

In this first transaction, Couche-Tard transferred to CrossAmerica 60 (52 fee and 8 leased) U.S. company-operated convenience and fuel retail stores having an aggregate value of approximately US$58.1 million. In exchange, CrossAmerica transferred to Couche-Tard assets having an aggregate value of approximately US$58.3 million. These CrossAmerica assets include all 17 of the Upper Midwest properties and the real property for eight master lease properties.

Prior to the exchange, Couche-Tard executed dealer agreements for the Circle K stores transferred to CrossAmerica, including leases and fuel supply agreements, with independent dealers who will lease and operate the stores after the exchange. These agreements were assigned to CrossAmerica as part of the exchange. In addition, Couche-Tard and CrossAmerica entered into a Sub-Jobber Agreement pursuant to which Couche-Tard will supply fuel to CrossAmerica for resale to the dealers at those 60 stores after the exchange.  The terms of the Sub-Jobber Agreement were unanimously approved by the independent Conflicts Committee of the board of the Partnership’s general partner in December 2018 at the time when the terms of the Asset Exchange Agreement were approved. The existing fuel supply arrangements for the eight master lease properties will remain unchanged.

Previous expectations were that the exchange of assets would occur in a series of transactions over a period of up to 24 months. However, it is now anticipated that the remaining exchange of assets will be completed in a series of transactions by no later than the end of the first quarter of calendar year 2020. The closing of each asset exchange transaction is subject to closing conditions set forth in the Asset Exchange Agreement. It continues to be expected that there will be no additional fundingrequired as part of these transactions. CrossAmerica also expects these transactions will be accretive to distributable cash flow.

CrossAmerica will be filing a Form 8-K with the Securities and Exchange Commission providing additional details of the exchange.

Gerardo Valencia, CEO and President of CrossAmerica, stated, “We are very pleased with the process we have established to make this a smooth and fast transition. We have identified very strong operators to maximize the potential of the sites we are taking over from Circle K and have a strong pipeline for the remaining 132 sites.”

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd