Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

Subsequent Events
6 Months Ended
Jun. 30, 2022
Subsequent Events [Abstract]  
Subsequent Events

12. Subsequent Events

Quarles Acquisition

On July 22, 2022, the Company consummated its acquisition (the “Quarles Acquisition”) from Quarles Petroleum, Incorporated (“Quarles”) of certain assets, including:

121 proprietary Quarles-branded cardlock sites and management of 63 third party cardlock sites for fleet fueling operations;
46 independent dealer locations, including certain lessee-dealer sites; and
a small transportation fleet.

The total consideration for the Quarles Acquisition as set forth in the purchase agreement was approximately $170 million plus the value of inventory on the closing date. The Company financed approximately $40 million of the purchase price with the Capital One line of credit and Oak Street, under the Program Agreement, paid the remaining approximately $130 million of consideration for fee simple ownership in 39 sites. At the closing, pursuant to the Program Agreement, the Company amended one of its master leases with Oak Street to add the sites Oak Street acquired in the transaction under customary lease terms.

The Quarles Acquisition added fleet fueling to the Company’s business, which includes operation of propriety cardlock locations, management of third-party fueling sites, and marketing of fuel cards with access to a nationwide network of fueling sites. The foregoing will be included as the Company’s fourth reportable segment.

Internal Entity Realignment and Streamlining

In the third quarter of 2022, the Company, in order to streamline business operations and provide long term synergies and other cost savings, approved an internal restructuring of certain direct and indirect subsidiaries. The internal restructuring involves a series of steps, the majority of which are expected to be completed by the end of the third quarter of 2022. As part of the internal restructuring plan, the tax status of certain subsidiaries will change from nontaxable to taxable. Accordingly, the recognition and derecognition of certain deferred taxes will be reflected in the continuing operations at the date the change in tax status occurs. The Company expects to record a one-time non-cash tax expense in the amount of approximately $8.5 million in connection with the internal restructuring. The recording of this deferred tax expense will align the Company’s deferred tax assets and liabilities to reflect the temporary differences between the financial statement and tax basis of the Company’s assets and liabilities at the time of the change in status.