Service Type: Valuation
Client: Jasper Oil Company
Client Description: A c-store operator and wholesale fuel marketer providing Valero and unbranded fuels to its stores and dealers.
- The Company retained Corner Capital to perform analyses and provide recommendations related to lease structures and economics behind the Company’s owned and operated c-store assets.
- Specifically, the Company was interested in divesting its retail operations (while retaining all its real estate), potentially to a family member as part of the owner’s retirement strategy.
- Corner Capital created and structured two potential sale structure valuations that were presented to the Company:
- Scenario 1 – Traditional Sale: Under this sale structure, the retail assets of the Company would be divested to a multi-chain operator. The buyer would purchase the Company’s c-store real estate, improvements, and equipment as part of the transaction, retaining minimal personnel above store level operations. Furthermore, this scenario assumes that the buyer is already a branded distributor through its own fuel distribution agreement and would require the Company’s fuel distribution agreements—branded and unbranded—to transfer to the buyer upon a sale.
- Scenario 2 – Lease Structure: Under this sale structure, single-store operators would enter into a lease agreement with the Company. It assumed the buyer does not have its own branded distributor agreement and would be supplied by the Company under a “rack plus” or “commission/consignment” supply model. The leases would be long term with a Net Lease structure, with the Tenant responsible for all taxes, maintenance, and repairs. Furthermore, the Company would enter into long term fuel supply contracts with each location and Tenant.
- Upon review of the two scenarios presented by Corner Capital, the Company determined that Scenario 2 was the best fit for its strategic objectives and moved forward with the lease structure divestiture of its retail operations.