EZ Energy Ltd. (TASE:EZ) subsidiary EZ Energy USA Inc. will buy fifteen gas stations and convenience stores and five fuel supply contracts from BP Products North America Inc. for $3.2 million. The properties are BPs last gas stations in the area of Petersburg in central Pennsylvania.
EZ Energy says that fuel deliveries by the acquired properties totaled 33.1 million gallons in 2007, and that the convenience stores' aggregate revenue was $6.3 million.
The five fuel supply contracts cover 37 gas stations in the area for a 20-year period. As a jobber, EZ Energy, will deliver more than 72 million gallons of fuel a year, worth an estimated $280 million annually. If the contract is closed, EZ Energy will owns 50 gas stations and convenience stores in Pennsylvania and Ohio, with an estimated annual revenue of over $350 million.
EZ Energy USA has also signed an memorandum of understanding (MOU) for the sale of up to five gas stations and convenience stores to a real estate investment trust (REIT) for $7 million, which EZ Energy will lease back for 15 years at $630,000 rent a year, giving a return on investment of 9%. The return on investment is normal for sale and lease-back deals of this kind last year. The company did not disclose the name of the REIT.
EZ Energy's board also approved a deal to sell the rights to four gas stations and convenience stores in Petersburg to chairman Eli Zahavi for $5 million. The company will lease back these properties for 20 years at $453,000 annual rent, giving a return on investment of 9%. The company's shareholders must approve this parties at interest deal.
Zahavi said, "EZ Energy is implementing its strategic plan, while simultaneously continuing to acquire gas stations and convenience stores in quality locations. We are also selling the gas stations real estate in our possession in order to implement our business model for financing the company's future expansion."
Published by Globes [online], Israel business news - www.globes-online.com - on August 11, 2008
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