Gas City gets stalking horse bids for stations, eyes bid protection OK

By Caroline Salls

Pittsburgh, March 18 - Gas City, Ltd. requested court approval of bid protections for the stalking horse bidders in the sale of substantially all of its assets, according to a Thursday filing with the U.S. Bankruptcy Court for the Northern District of Illinois.

Gas City said that Alimentation Couche-Tard Inc. has submitted a stalking horse bid under which it would pay $91.46 million plus 100% of the value at Gas City's cost of its readily salable inventory existing at closing for 46 of the company's stations.

In addition, TA Operating, LLC has submitted a stalking horse bid under which it would pay $12.25 million plus 100% of a working capital amount for four truck stop stations.

Under the bid procedures approved by the court in January, qualified bids could not include break-up fees or expense reimbursements unless those provisions were approved by the court at least two weeks before the bid deadline.

However, Gas City said the bid procedures did allow it to work with bidders to cure defects that will result in qualification of the bid.

As a result, the company said it is seeking approval of the bid protections for the stalking horse bidders even though the stalking horse bids were finalized less than 14 days before the March 23 bid deadline.

Under the Alimentation bid protections, Gas City would pay the buyer a break-up fee equal to 3.28% of the bid for each station that is sold to a third party, excluding any working capital amount, provided that the break-up fee will be fixed at $3 million if 13 or more of the stations are sold to a third party.

Initial overbids for stations covered by the Alimentation bid must be at least 5.28% higher than the stalking horse bid on a station-by-station basis, and subsequent overbids must be at least 1% higher than the previous bid.

Alimentation will have the right to submit an overbid topping any overbid by a qualified bidder for any station and will be given credit for 3.28% of the bid on a station-by-station basis.

Meanwhile, Gas City would pay TA Operating a break-up fee of 3% of its bid for each truck stop station that is sold to a third party, excluding the working capital amount.

The initial overbid for each truck stop station must be at least 5% higher than the stalking horse bid, and subsequent overbids must be at least 1% higher than the previous bid.

TA operating will also have an overbid topping option and will be given credit for 3% of the bid on a station-for-station basis.

The auction will be held on April 4, and the sale hearing is set for April 13.

A hearing on approval of the bid protections is scheduled for March 21.

Gas City, a gas station and truck stop operator based in Frankfort, Ill., filed for bankruptcy on Oct. 26. The Chapter 11 case number is 10-47879.

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