CrossAmerica Outlines Long-Term Strategy
ALLENTOWN, Pa. — After signing an asset-exchange agreement with Alimentation Couche-Tard Inc., CrossAmerica Partners LP is looking further down the road.
As Convenience Store News previously reported, Couche-Tard and CrossAmerica Partners reached an asset-exchange agreement that will see 265 sites change hands in a series of transactions.
"These announcements and coming transactions are a great step for us. However, it is just the first step in our long-term strategic plan," CrossAmerica Partners President and CEO Gerardo Valencia said during a Dec. 17 call.
CrossAmerica will continue to work with Couche-Tard to optimize its cost structure and capture synergies, according to Valencia. The Allentown-based company's general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of Laval, Quebec-based Couche-Tard.
Moving forward, Valencia said CrossAmerica wants to participate in the ongoing consolidation of the highly fragmented convenience and fuel retailing industry.
"We continue to believe there will be opportunities for us in the coming years," the chief executive noted.
Other parts of the company's long-term strategy are:
- Improve its cash flow to target a long-term coverage ratio of 1.1x annually;
- Manage its balance sheet prudently to target a long-term leverage ratio of 4x to 4.25x; and
- Continue to create "a leading national wholesale distributor MLP with stable cash flow, a solid balance sheet and a great opportunity to work with a supportive, investment-grade sponsor."
According to Valencia, CrossAmerica expects to provide a better view of its long-term strategy in the first quarter of 2019.
In an asset swap unveiled Monday, CrossAmerica will receive 192 company-operated convenience and retail fuel stores in the United States. Of the sites, 162 are fee-based and 30 are leased. The transaction is valued at $184.5 million.
Couche-Tard's Circle K network will receive the real estate property for 56 U.S. company-operated convenience and retail fuel stores currently leased and operated by Couche-Tard/Circle K.
The fuel supply agreement to these sites, which are part of CrossAmerica's wholesale segment, will remain unchanged.
In addition, Circle K will receive 17 company-operated stores in the upper Midwest region of the U.S. Fourteen of the sites are fee-based and three are leased. All 17 sites are currently part of CrossAmerica's retail segment.
The total transaction value for the 73 sites is $184.5 million.
CrossAmerica Partners is a wholesale distributor of motor fuels and owner and lessor of real estate used in the retail distribution of motor fuels. Formed in 2012, CrossAmerica is a distributor of branded and unbranded petroleum for motor vehicles in the U.S. and distributes fuel to approximately 1,300 locations and owns or leases approximately 900 sites. Its geographic footprint covers 31 states.