GPM Petroleum Files for $100M IPO

RICHMOND, Va. — GPM Petroleum LP on Monday filed a Form S-1 with the U.S. Securities & Exchange Commission (SEC) to initiate an initial public offering (IPO) to raise up to $100 million by selling units of the wholesale distributor of motor fuels. The units will trade on the New York Stock Exchange under the ticker symbol GPMP.

If approved by the SEC, Richmond-based GPM Investments LLC would purchase a majority of its motor fuel from GPMP. According to the filing, GPM Investments has 502 convenience stores that sell motor fuel, merchandise, food, beverages and other products and services to retail customers in the Mid-Atlantic, Southeastern, Midwestern and Northeastern United States, including under the Fas Mart, Shore Stop and Road Ranger banners.

"Since its formation in 2003, GPM [Investments] has achieved significant growth through a series of eight acquisitions of convenience stores and dealer sites that have been successfully integrated into [its] existing business," the company wrote in the filing.

GPM Petroleum, now a division of GPM Investments, would be domiciled in Delaware and operate as a master limited partnership (MLP), which provides an advantageous tax structure compared to C corporations. However, GPM Petroleum must pay out a significant portion of its net profits to its unitholders as distributions.

According to the SEC filing, GPMP has several agreements already in place with GPM Investments post-IPO, including:

• "A fuel distribution agreement, pursuant to which we will distribute the substantial majority of motor fuel purchased by GPM for sale to its existing convenience stores (other than convenience stores for which we are the distributor of motor fuel under the GPM RR Distribution Contract), independent and lessee dealers and consignment locations at cost, plus a fixed fee of 4.5 cents per gallon for a period of 10 years, in addition to future volumes added pursuant to the terms of our omnibus agreement, which we refer to as the GPM Distribution Contract;
• A 10-year right of first offer to purchase the right to distribute fuel to GPM for newly acquired convenience stores at a negotiated rate; and
• A 10-year right to participate in acquisitions with GPM, to the extent they are able to reach an agreement on terms.

In the filing signed by GPM Investments President and CEO Arie Kotler, GPMP stated that it should be able to thrive as a publicly traded independent company based upon a host of factors, including stable cash flows; a strong and experienced management team; long-term relationships with independent oil companies and independent refiners; and geographically diverse operations.

Looking ahead, Kotler outlined several business strategies for GPMP's growth, including purchasing the right to provide wholesale motor fuel to convenience stores that may be acquired by GPM Investments, as well as by directly acquiring wholesale motor fuel businesses with existing dealer operations.

"Through GPM [Investments'] expansion, we plan to further develop our wholesale motor fuel distribution both within our existing area of operations and in new geographic areas," the MLP wrote in its filing.

Post-IPO, GPMP expects to have plenty of funds available to make acquisitions independent of its parent company as well. "We believe our strong balance sheet and ability to access the debt and equity capital markets will provide us with the financial flexibility to pursue accretive acquisition and expansion opportunities," the company stated in its filing.

The percentage of GPMP shares to be owned by GPM Investments, as well as the exact makeup of the new company's management and board of directors is expected to be revealed in subsequent SEC filings.