Oahu Texaco
dealers, buyer hope
to salvage pact

Station operators say they'll
drop their suit if they're allowed
to keep their protections

By Rob Perez
Star-Bulletin

Two sides in a dispute over the proposed sale of Oahu's Texaco gas stations say they are hopeful an agreement can be worked out that will salvage the deal.

Texaco dealers expressed optimism yesterday despite filing a federal lawsuit seeking to block the proposed sale to Dallas-based U.S. Restaurant Properties Inc.

The 10 dealers who run 12 of the 27 stations Oahu stations sued Texaco Refining and Marketing Inc., claiming the company is not meeting requirements of a federal law giving dealers certain rights when their supplier pulls out of a market.

The dealers say they won't proceed with the lawsuit if the buyer agrees to give them the same protections contractually that they now have under federal and state law.

Because U.S. Restaurant only would be the dealers' landlord and not their gas supplier as well, they would lose the federal and state protections, the dealers say.

But Hani Baskaron, who heads B.C. Oil Ventures, the California company that will manage the stations for U.S. Restaurant, said he was surprised by the lawsuit because the dealers are being offered the same protections they have now.

He said discussions Friday indicated the dealers were satisfied with the proposed leases.

"Everything was fine. We had no idea they were going to do this," Baskaron said of the lawsuit.

Despite the filing, Baskaron said he was confident an agreement still could be reached this week.

The dealers estimated the proposed leases would cost them an additional $3,000 a month and eventually would make staying in business difficult. The additional costs likely would prevent dealers from setting below-market pump prices as promised publicly by Baskaron, dealers said.

"I'm just wondering how will we get lower prices," said Andy Pung, who operates a service station near Diamond Head.

Baskaron, however, said the leases would cost the dealers less than what they pay Texaco now.

Texaco is selling its Oahu assets to get state approval for a national marketing and refining merger between Texaco and Shell Oil Co.

The state Attorney General's Office is reviewing the proposed sale and probably will not complete that review while dealer-buyer negotiations continue, said Ted Clause, deputy attorney general. A spokesman for Texaco Refining could not be reached for comment.

Texaco is the only defendant named because under federal law the company, if it wants to sell the stations, has sole responsibility to ensure dealers are offered a replacement franchise from a branded supplier, the dealers said.

If the dealers learn the sale is about to close without sufficiently addressing their concerns, they intend to immediately ask the court for a temporary restraining order blocking the closing. But Baskaron said that won't happen.

"We're not going to close the deal until we satisfy the dealers," he said.