Southland Holders OK $4.9-Billion Buyout
Southland Corp. shareholders Tuesday approved a $4.9-billion leveraged buyout, putting the nation’s largest convenience store chain in private hands.
The buyout by the company’s founding Thompson family is expected to be closed next Tuesday, Southland spokeswoman Markeeta McNatt said. “You don’t say it’s over till it’s over. We’re in the home stretch,” she said.
The approval followed the pricing of $2.2 billion in “junk bonds.” The buyout also involves bank loans of $2.6 billion, McNatt said.
About 150 people attended Tuesday’s 10-minute shareholders meeting, the fifth held concerning the sale of the Dallas-based corporation that owns the 7-Eleven convenience store chain.
The four previous meetings were adjourned without action because of difficulty in pricing the bonds due to turmoil in the stock market since the Oct. 19 stock crash.
On Monday, Goldman, Sachs & Co. and Salomon Bros., the Thompsons’ investment bankers, said they successfully priced $2.2 billion in high-risk, high-yield bonds needed to complete financing.
Sale of the bonds, which will yield as much as 18% interest, were announced Tuesday, McNatt said. The company will receive $1.5 billion from the bond sale.
Members of the Thompson family controlled 73% of the common shares going into Tuesday’s meeting, after acquiring them this summer through the purchase of 66% of common stock. The family also bought up 97% of outstanding preferred shares through a tender offer this summer.
In the merger, each outstanding share of Southland common stock will be converted to the right to receive $61.32 in cash and 0.6672 of a share of a new series of preferred stock. Each share of a series of Southland’s preferred stock will be cancelled and exchanged for the right to receive $90.27 in cash, the company said in a news release.
The successful bond issue is expected to provide a major lift to the junk bond market, which has virtually ground to a halt since the stock market crash.
Goldman Sachs and Salomon Bros. had struggled for more than a month to find buyers for the debt issue.
The offering, which was amended three times, had met resistance from many potential investors, who worried that the value of the company’s assets may have fallen sharply after the stock market collapse and that the company would be unable to pay off the debt.
Indications Monday that Southland finally would be successful in completing its financing came earlier in the day as its shares rose sharply on the New York Stock Exchange, closing up $5 a share at $67.
