When Leslie M. Corley, president of Omaha, Nebraska-based Convenience Corp. of America Inc. (CCA), acquired 146 Midwestern 7-Eleven convenience stores for $40 million two years ago, the transaction immediately placed his company among the largest black-owned concerns in the nation. Corley’s plans for CCA called for strategically marrying his operations with brand-name fast-food outlets and creating a franchise powerhouse. But some recent financial difficulties apparently persuaded Corley to sell control of his Slurpee empire.
The West Palm Beach, Floridabased LM Capital sold a majority interest of CCA for an undisclosed sum to a group of investors in 1997. Terms of the deal prohibited Corley from revealing the name of the investment group and the value of the sale. But, he says, “It’s always been customary for us to sell all or part of our investments.”
So what happened to CCA? “CIS and Contemporary Industries Corp. [CIC] are no longer 7-Eleven franchises,” says Margaret Chabris, public relations manager at Southland Corp. Corley, who owns and operates the 10-year-old investment bank LM Capital, formed CCA in order to acquire Contemporary Industries Holdings, a holding company for convenience store operator CIC in December 1995.
But CIC “filed for voluntary bankruptcy” in February and has sent prospectuses “to over 100 parties as part of a bankruptcy sale of assets,” according to Steven Victor, the current chief financial officer brought in by Development Specialists Inc., an international turnaround firm. Victor says CIC’s shareholders, LM Capital and Opportunity Capital tapped the firm in mid-January after they had failed to significantly reverse their sagging bottom line. “CIC has been feeling the negative impact of competition over the past year and hasn’t been able to generate sufficient cash flow,” says Victor. “As part of the reorganization process, CCA cut the number of outlets from 150 to 113 by selling 10 stores and closing others.”
According to Victor, CIC secured a $3.1 million loan from Indianapolis-based Banc One to provide cash flow so the company could maintain operations through June. This buys time for shareholders to find a buyer for the company’s assets.
Corley, a former securities analyst for Fidelity Investments, is currently expanding LM Capital’s portfolio of companies. He says the firm is in the process of increasing its 70% ownership stake in Roberts Brothers Inc., a $2 million enterprise that has produced canned tomato products for over a century.
Many of Corley’s current deals fall only in the $10 million range. But, he says: “I certainly hope that some of our future acquisitions rank on the BE 100s.”