ORANGE, Calif., Jan. 7 /PRNewswire-FirstCall/ -- United Fuel & Energy Corporation (BULLETIN BOARD: UFEN) , a leading distributor of gasoline, diesel and lubricant products to customers in the southwestern and south central U.S. today reported that it has sold substantially all of the assets of its propane distribution business, excluding a $3.4 million portion of accounts receivable being retained by United Fuel, for an aggregate purchase price of approximately $9.8 million. The sale closed on December 31, 2008. United Fuel is using the net cash proceeds from the sale of the assets of its propane distribution business to repay certain term loans and borrowings under its revolving credit facility.
"We are pleased to have completed the sale of this non-core business line at a substantial gain," stated Frank Greinke, United Fuel & Energy's Chairman and Chief Executive Officer. "The propane business didn't integrate well into our fuel distribution and card-lock operations and we felt that this was an excellent time to complete this attractive transaction to streamline operations and strengthen our balance sheet. We paid down our banking credit facilities by $7.1 million and reduced our annualized interest expense on the related debt pay-down by approximately $400,000."
The transaction was completed for approximately $7.7 million in cash, plus $2.1 million in seller notes. United Fuel agreed to sell substantially all of the assets of its propane distribution business, excluding approximately $3.4 million in accounts receivable that were retained by United Fuel. The assets were purchased by a business newly established by Thomas E. Kelly, the Company's Vice Chairman and a member of the Company's board of directors, and named Propane Direct Enterprises, LLC. The amount of consideration paid by Propane Direct to United Fuel in connection with the propane disposition was negotiated between Propane Direct and the Company and approved by the Company's board of directors, excluding Thomas E. Kelly. In addition, the audit committee of the Company's board of directors, which is composed entirely of independent directors, also approved the propane disposition.
About United Fuel & Energy Corporation
United Fuel & Energy is engaged in the business of distributing gasoline, diesel and lubricant products primarily in certain markets of Texas, California, New Mexico, Arizona and Oklahoma. United Fuel represents the consolidation of numerous companies, the most significant of which are the Eddins-Walcher Company and Cardlock Fuels System. As a part of its long range plan, United Fuel intends to continue to expand its business through strategic acquisitions and organic growth initiatives.
United Fuel currently engages in the following activities: -- Card-lock operation (unattended re-fueling of commercial vehicles). -- Wholesale fuels and lubricants (to commercial customers).
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Safe Harbor Statement
Certain statements included in this press release may constitute forward-looking statements. Actual outcomes could differ materially from such statements expressed or implied herein as a result of a variety of factors including, but not limited to: weather, levels of oil and gas drilling and general industrial activity in United Fuel's area of operations, changes in oil and gas prices, risks associated with acquiring other businesses, the price of United Fuel's products, availability of financing and interest rates, competition, changes in, or failure to comply with, government regulations, costs, uncertainties and other effects of legal and other administrative proceedings, general economic conditions and other risks and uncertainties. As a result, this press release should be read in conjunction with periodic filings United Fuel makes with the SEC. The forward-looking statements contained herein are made only as of the date of this press release, and United Fuel does not undertake any obligation to publicly update such forward- looking statements to reflect subsequent events or circumstances.
Contact:
Frank Greinke, Chairman and CEO
