Oahu Texaco
dealers try to
block sale

They say the pact would cost
them $3,000 more a month and
may cause higher prices

By Rob Perez
Star-Bulletin

A group of Texaco service station dealers is trying to block the proposed sale of their stations to a Dallas company, claiming the deal would remove their federally protected rights as dealers and may lead to higher gas prices for consumers.

A trade organization representing the 10 dealers today said the proposal to sell Oahu's 27 Texaco stations and a terminal to U.S. Restaurant Properties Inc. would raise the dealers' existing rent and other obligations by about $3,000 a month.

Asked what would happen if the deal in its current form goes through, Beverly Harbin, president of the Hawaii Automobile Repair & Gas Dealers Association, said the dealers couldn't survive.

"They'd be out of business," she said. "They'd be dead."

The dealers, who operate 12 of the 27 stations, planned to file a lawsuit in federal court late this morning to block the sale, Harbin said.

But she said the dealer group would continue negotiating with the buyers.

Filing the lawsuit will give the dealers the ability to seek a temporary restraining order if the buyers try to close the deal without better terms for the dealers, Harbin said.

A representative from B.C. Oil Ventures, the Southern California company that would run the stations for U.S. Restaurant, could not be reached for comment this morning.

But in a recent interview, B.C. Oil President Hani Baskaron said the dealers were being offered fair leases. "They have a much better deal than they ever had with Texaco," he said.

Baskaron also said the 27 stations, selling under the Arco brand, would be able to offer gasoline at prices below the market.

The proposed sale still needs approval from the state Attorney General's Office, which required that either Texaco or Shell Oil Co. sell their respective assets on Oahu to prevent antitrust violations as part of a national marketing merger of the two companies.

"We're not trying to destroy (the deal)," Harbin said. "All we're trying to do is protect the dealers' rights."

Under federal law, Texaco must offer the dealers a replacement franchise for the selling of branded gasoline. But that requirement isn't being met under terms of the proposed transaction, Harbin said.

She also said the buyers refuse to honor the dealer rent caps set under Hawaii law and would add about $3,000 monthly to dealer costs in the middle of a recession.

"In addition to immediately driving up pump prices, the contracts could result in economic eviction of the dealers in the near future," the dealer trade group said in a statement.

The dealer group said B.C. Oil apparently is forming a shell company called Oahu Terminal LLP to handle the dealer contracts, but B.C. Oil has refused to disclose financial information typically provided to franchisees.

The dealers are asking the court to block the sale of only the 12 stations that the 10 dealers operate. But if the court blocks that, it will effectively kill the whole deal. Under terms of the AG divestiture order, Texaco is required to sell all the stations to one party.