The last Rhode Island remnants of Pawtucket-based DB Companies will be divvied
up among winning bankruptcy court bidders Amerada Hess Corp. and Getty Realty
Corp.
The family business, which was founded in 1927 by Arthur J. DeBlois III, filed for Chapter 11 bankruptcy protection in a Delaware federal court in June. Since selling off its original oil-delivery business a decade ago, the company has operated about 150 DB Mart convenience stores and gas stations in Rhode Island, Massachusetts, Connecticut and the Hudson Valley region of New York.
The sales of the liquidation netted about $71 million for DB Companies, which had estimated its debts at about $65 million and its assets as less than $100 million in its bankruptcy filing.
Though the court was not releasing the names of all the winning bidders, New York City-based Hess announced it would be purchasing 20 of the convenience stores for $18 million, including 10 locations in Rhode Island.
Jericho, N.Y.-based Getty said it would acquire 36 DB Marts, although only one in Rhode Island, for about $25 million.
Naeem Khalid, whose address was not included in the court records, also purchased 24 locations, five of them in Rhode Island.
The remaining stores were sold individually or in small groups to another 50 bidders. Forty-four of DB Mart’s stores are located in Massachusetts and 25 are in Rhode Island.
“The company is delighted at the level of bidder participation in the sale process and the resulting high values obtained,” said Arthur DeBlois III, whose grandfather started the company, in a statement released by Virginia’s Matrix Capital Markets Group Inc., which handled sales efforts on the properties. “I am particularly heartened that the company was able to run a sale process that has enabled many of our franchisees the opportunity to acquire their stores,” said DeBlois, who had served as the most recent president and CEO.
Calls to DB Companies’ offices in Pawtucket were not returned.
But the bankruptcy proceedings weren’t without some drama. About half of the DB Marts were franchised, while others were company-owned, and news reports out of Delaware quoted franchisees who were upset that the auction process moved so quickly and they would not have the opportunity to meet the bids of the gas giants, particularly on a number of choice locations.
And three of the DB Companies’ major shareholders, Robert E. DeBlois, Claire DeBlois Canning and Stephen J. DeBlois, filed an emergency motion requesting that the judge order the company to provide them with financial documents. In the filing, the trio questioned whether the company truly needed to be liquidated.
According to Matrix, the company received more than 750 purchase offers for one or more of the company’s stores. Of those offers, 119 stores were sold on a sealed-bid basis and an additional 28 stores were sold at a public auction on Aug. 25 and 26.
Kevin Shea, a spokesman for Getty, said all of the DB Marts the company had purchased in Massachusetts and Rhode Island were operational. He said Getty had been interested in the properties since the auction was announced earlier this summer and would be interested in leasing out management of locations to individuals or other corporations.
While the realty group’s largest tenant is Getty, he said it was not necessarily a “foregone conclusion” that all of the DB Marts would become branded Getty. For Hess, which has nine Rhode Island locations, the 10 DB Mart sites would represent a significant move into the state. Jay Wilson, a spokesman for Hess, said the company has been looking for an opportunity within the state for several years. He said all of the DB Marts will be turned over to the Hess brand and be managed by the company. Both Shea and Wilson said their companies expect to close on the transactions and have new signage up before the end of the year.
Chief Financial Officer Robert Kliewe said in the June court papers that DB Companies lost $3.1 million in 2003 on sales of $176 million, up 7.4 percent from 2002. Kliewe said the company had “struggled to compete successfully against large national chains” and suffered from “deteriorating cash flow.”
Court papers listed the company’s largest unsecured creditors as the 1818 Mezzanine Fund LP, managed by Brown Brothers Harriman & Co., also a major shareholder, owed $13.7 million; and Valero Energy Corp., owed $2.1 million. Another $37 million is owed in secured debt to GMAC Commercial Mortgage Corp. (With Bloomberg News reports).
