Sunday, August 05, 2012

Town & Country's PEU Stripes

Susser Holdings purchased Town & Country Food Stores in 2007, then re-branded the stores as Stripes.  Susser Holdings is an affiliate of Wellspring Capital Management LLC, a New York City based private equity underwriter (PEU).

Town & County sold out a year after Hirschfeld Steel became an affiliate of Insight Equity, another private equity firm.  Blog readers may have noticed comments made regarding Hirschfeld Steel's dramatic tax reduction after being acquired by Insight Equity.  Insight turned Hirschfeld into a limited partnership, where the tax obligation is passed on to partners.

Susser plans to do the same with their petroleum division, slated for a $200 million independent public offering (IPO).  Predecessor Susser Petroleum LLC will become Susser Petroleum Partners.  The new company should experience dramatic federal tax reductions, along the lines of Hirschfeld Steel.

Yet, there 's a potential local impact.  Stripes gas prices could go up to ensure profitability at both Susser (parent) and Susser Petroleum (which formerly delivered gas at cost to Stripes convenience stores).

SHC's existing stores will ... be supplied by us at cost plus a fixed profit margin of three cents per gallon

Also, Susser Petroleum profits will grow at any of the 75 stores Susser plans to sell to Susser Petroleum and lease back.  These will bring "incremental income from motor fuel sales."  Sales/leasebacks are one of many PEU ways to monetize a company's physical assets.

Financial engineering exists at a local level.  It could hit area citizens in the wallet at the gas pump. Consider it PEU stripes.

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