Circle K Stores

Transaction Overview
Transaction type: Credit tenant lease / Private placement
Total Transaction Size: $184 Million

Transaction Background
Robert Kathary, the owner of 272 convenience stores leased to Circle K, was facing an imminent requirement to refinance the mortgage debt encumbering the stores he owned. None of the commercial banks or investment banks he contacted was able to create a new financing with sufficient proceeds to repay the existing debt. Facing potential default and resultant adverse economic and tax consequences, Kathary retained CBA to structure a new lease to provide Circle K with the flexibility they required and also allowed the owner the opportunity to refinance the properties.

Tosco, a Stamford, CT-based petroleum company had purchased Circle K Convenience Stores in connection with its emergence from bankruptcy proceedings and required greater flexibility to manage its store base. CBA creatively structured a bondable lease which met the needs of Circle K and Tosco and provided significant net refinancing proceeds to the owner of the properties.

The terms of the new lease allowed Kathary to refinance his maturing debt with the benefit of Tosco's BBB- credit rating, extended the term of the lease and gave Tosco its much needed flexibility to close poor performing stores and replace them with qualified substitute collateral. CBA created a bondable lease financing transaction providing Kathary with $184,000,000 in net proceeds, an amount far more than was necessary to satisfy the existing debt.

Transaction Summary
CBA originated and funded a Credit Tenant Lease ("CTL") transaction secured by a long term lease on 272 Circle K Convenience Stores. Subsequent to funding the $184,000,000 mortgage backed by the CTL, CBA issued Credit-Lease-Backed-Pass-Through Certificates through a private placement. CBA Securities, Inc. and Lehman Brothers, Inc. acted as placement agents.