The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Esso dealers have asked their prospective new supplier about the possibility of purchasing their own gas stations, Tribune Business can reveal.

Sources close to the situation confirmed to this newspaper that a group of Esso dealers have written to the Barbados-based SOL Group to explore this option, observers describing it as a “logical” move that – if granted – would likely boost their profit margins.

Tribune Business understands that the SOL Group made no commitments in its reply to the dealers, but did pledge to “improve” the Esso business it will inherit for the benefit of all concerned.

One dealer, speaking to Tribune Business on condition of anonymity, said: “We wrote to SOL as retailers telling them we would like to purchase our sites [gas stations].

“They replied to us within days, saying their contractual [sale] agreement with ExxonMobil does not allow them to interact or negotiate with us at this time, but they’re looking forward to coming in here and improving the business, making us all legitimate concerns.”

Clearly impressed by the speed at which the SOL Group had responded to their request, the dealer added: “For us, it was nice to see them respond so quickly. With Esso, you’re waiting a long time.”

And they expressed hope that, if the SOL purchase ultimately went through, they could be given a ‘right of first refusal’ to buy the business if the Barbadians ever decided to sell themselves. Options to buy their own stations were another desire.

Most gas stations, whether supplied by Esso, Rubis (Texaco) or FOCOL (Shell), are operated under a lease agreement with the wholesalers by Bahamian franchisee dealers.

If more gas dealers became owner/occupiers, meaning they owned their real estate instead of merely being oil company tenants, they would likely have more control over their own destiny.

They would no longer have to pay hefty monthly rentals to the oil companies, and would be better able to negotiate their own terms with the wholesalers. This would also give them the freedom to switch fuel suppliers and, ultimately, boost their profitability.

Arnold Heastie, who owns his own Esso-supplied gas station on Blue Hill Road, said he was unaware of any move by other dealers to push to own their own sites.

However, he backed the effort, telling Tribune Business: “I’m sure that with that purchase [the SOL Group deal] imminent, a lot of stations will be asking that question. Why not?

“I’m sure they’d like to purchase. Everyone wants to purchase their own station. I would think it seems logical.

“It’s a different game when you own your own station. Most of the ones that are owned by the dealers have a higher margin of profitability. So why not?”

The Esso dealers, though, remain skeptical about the Government’s promises to consult them before approving the SOL purchase, or whether it can actually block the deal from going through.

Tribune Business, in revealing Esso’s sale to the SOL Group last month, also disclosed that the Government was unhappy about the agreement on two counts – that it had not been informed in advance, and that Bahamian investor groups appeared to have no opportunity to participate.

Khaalis Rolle, minister of state for investments, earlier this month promised the Government would ensure Esso’s Bahamian dealers were not ‘disadvantaged’ by any sale to the SOL Group.

However, one dealer, speaking on condition of anonymity, said “there’s not a whole lot of credence we can put in what they [the Government] say”.

They added: “For us, it’s a matter of wait and see. I don’t know if it’s good that they said that. They [the Government] have to put their money where their mouth is.”

Both the anonymous dealer and Mr Heastie were skeptical that the Government could ultimately refuse to approve the SOL Group purchase, given that the Bahamas deal was part of a multi-territory package said to be valued at $650 million.

“There’s a lot of money being thrown out, and I don’t know if the Government can say: ‘Re-negotiate and include Bahamians,” the dealer source said.

Mr Heastie added: “I’m sure it’ll go through. It’s done.’

Tribune Business can also reveal that SOL Group executives were in the Bahamas last week to meet with staff from Esso (Bahamas) head office and the Clifton Pier terminal. Meetings with individual staff were held on Wednesday, prior to a group event on Thursday morning. All meetings were held at the British Colonial Hilton.

This newspaper was at the resort on Wednesday morning on other business, and saw that Esso/ExxonMobil had reserved a room that same day for between 3pm-7pm.

And the meetings were confirmed by other sources. “We were informed as dealers that the head office was going to be closed on Thursday morning for a staff meeting, and re-opening that afternoon,” one said.

“They sent notices that their entire operation was going to be shut down for a staff meeting.”

The SOL Group, and its SOL Petroleum subsidiary, is headed by Sir Kyffin Simpson, the businessman who holds the Suzuki franchise for the entire Caribbean region via his Simpson Motors business.

SOL stands for Simpson Oil Ltd, and its purchase of Esso (Bahamas) is part of a wide-ranging deal that will see the Barbados-based conglomerate snap up ExxonMobil operations in six other Caribbean territories. That likely values the Bahamas operations by themselves at $100 million-plus.

SOL Petroleum has extensive Caribbean-wide interests, having acquired Shell’s retail and commercial fuels business in Barbados, St Lucia, Antigua, Anguilla, Guyana, Suriname, Belize, St Kitts/Nevis, St Vincent, Grenada, British Virgin Islands, Netherlands Antilles and Dominica.

It operates 350 Shell-branded service stations in the Caribbean, plus another 60 under the Sol brand in Haiti, Anguilla, St Kitts, St Maarten and the BVI.

All told, SOL Petroleum operates 55 companies in 19 Caribbean territories, and it has long wanted to break into the Bahamas.

Tribune Business reported several years ago how SOL bid on Shell (Bahamas) when it came on the market, only to be disadvantaged by its ‘foreign’ status in a process that ultimately saw it lose out to BISX-listed FOCOL Holdings.

This newspaper was also informed that several Bahamian groups were being formed to either offer an alternative buyer to the SOL Group or potentially partner with it in the deal.

These moves are either designed to ‘pick up the pieces’ or gain a ‘piece of the action’, especially in light of the likely difficulties the SOL Group may encounter in obtaining Government approval for the Esso purchase.

However, former Esso (Bahamas) country manager, Keith Glinton, has denied to Tribune Business that he is involved with any Bahamian bid or seeking to put one together.

“I am not in discussions with anyone relating to any purchase or any local group,” he said. Mr Glinton confirmed he had been relocated back to the Bahamas by ExxonMobil, but said this decision was taken before the SOL Group purchase was signed.