CSD speaks with Steve Kirkham, owner of Rocky Top Markets about the recent acquisition.
Lehigh Gas Partners LP completed the acquisition of Rocky Top Markets LLC and Rocky Top Properties LLC in Knoxville, Tenn. last week for $36.9 million.
Lehigh Gas Partners paid $10.6 million at closing for the purchase of one fee property site, three leasehold motor fuel stations, seven third party supply contracts and certain other assets and equipment.
Concurrent with the closing, Lehigh entered into a master lease for 29 motor fuel stations, which it will purchase on or after Aug. 1, 2015 for $26.3 million. The transaction was financed under the Lehigh Gas Partners credit facility. Eight weeks after announcing that it entered into an asset purchase agreement with Rocky Top Markets LLC and Rocky Top Properties LLC, Lehigh Gas Partners LP has completed all outstanding operational and regulatory hurdles, and has officially concluded the acquisition of the 34 store chain in Tennessee.
The transaction enhances Lehigh Gas Partners’ geographic diversity and provides it access to a new market region. The 34 sites are located in and around the Knoxville, Tenn. region and along Interstate 40 and 75. In aggregate, including the assumed third party supply contracts, the total portfolio sold 34.1 million gallons of motor fuel in 2012. Thirty-one of the 34 sites are Shell branded.
Convenience Store Decisions spoke with Steve Kirkham, owner of Rocky Top Markets about the decision to divest his stores to Lehigh after 33 years in business.
Kirkham noted a combination of factors led him to sell the business that was founded in 1980. “I’m retirement age, government regulations, the uncertainty of Obamacare—those were the primary reasons,” he noted.
He recalled the famous quote by the Great Nez Percé Chief Joseph who, after surrendering to the cavalry and heading off into the Rocky Mountains said, “From where the sun now stands, I will fight no more forever.”
“I never thought I would ever feel that way about this industry,” Kirkham noted.
But with new government regulations and tight margins, times are certainly getting tougher.
“It’s time for me to move on and retire while I’m still physically in shape and get out and enjoy life,” he said.
Rocky Top partnered with Mark Radosevich, president of PetroActive Real Estate Services LLC, the exclusive advisor to Rocky Top Markets in this transaction. “We’ve worked with them in the past. If we had a location that just didn’t fit our model they have sold those locations for us,” Kirkham noted.
“Mark brought Lehigh and another company to us, and I made a decision to pursue Lehigh because I felt that—based on the communications and what I’d heard about other deals—that it was a transaction we could complete with very little complication and quickly, and that’s exactly how it worked out. Lehigh was a pleasure to work with on the transaction. They were in expansion mode and wanted our area, and our locations fit what they were looking for and all the stars just aligned for both of us.”
The stores changed over on Monday of last week at midnight when Lehigh took over the operations, with most employees staying on as the company changed hands.
Jim Gardner, who served as chief financial officer at Rocky Top for the last 18 years, has been hired by Lehigh as the new regional manager. Lehigh also acquired 17 Zoomerz convenience stores from Rogers Petroleum, which was also recently announced.
“Jim will be responsible—as I understand it—for both Rocky Top and Zoomerz. I can’t say enough good about Jim. He’ll do an excellent job for them,” Kirkham said.
Lehigh was not immediately available for comment.
Rocky Top got its start in 1980. “At the time I was president of Harriman Oil Co., a local wholesaler and they had a lot of prime locations that had been dealer locations, and I was able to talk the ownership into trying the convenience store industry because it seemed to be the trend. We formed Rocky Top Markets and started converting real estate the wholesaler owned into convenience stores and it grew into what it is today,” said Kirkham.
With the Rocky Top acquisition complete, Kirkham has no plans to slow down.
“I’m going to continue build, commercial real estate has always been a hobby of mine, so I’m going to continue developing that, I’m going to play more golf if that’s possible, spend some time in Mexico and do some travel,” he noted.
Kirkham noted that despite industry frustrations, there were no circumstances that made him feel he needed to get out of the business. “All the stars just lined up with Lehigh. It was Mark Radosevich with PetroActive Real Estate Services LLC, who brought them to me, and he did a great job as the go between putting all the pieces together, and it all came out a lot smoother than I anticipated,” he said.
