SUBSEQUENT EVENT

6 Months Ended

Mar. 31, 2020

SUBSEQUENT EVENT

SUBSEQUENT EVENTS

11. SUBSEQUENT EVENT

In April 2020, the Company completed its previously announced transaction with Chas. M. Sledd Company (“Sledd”), a West Virginia wholesale distributor serving the convenience store industry, to jointly own and operate a limited liability company (“Team Sledd”) formed for the purpose of owning and operating Sledd’s wholesale distribution business. In conjunction with the transaction, Sledd contributed substantially all of its assets and stated liabilities to Team Sledd, while the Company contributed $10.0 million in cash, of which $6.5 million was structured as equity and $3.5 million was structured as a secured loan to Team Sledd and subordinate to the liens of Team Sledd's existing secured lenders.

In connection with the closing of the transaction, the Company and Sledd entered into an Operating Agreement for Team Sledd which sets forth each party’s respective ownership interests in and capital contributions to Team Sledd and provides for the management of the business and affairs of Team Sledd. At the transaction closing date, Sledd and AMCON owned approximately 55% and 45% of Team Sledd’s outstanding equity, respectively. As contemplated by the Operating Agreement, it is anticipated that certain membership interests in Team Sledd will be redeemed over a six year period, or potentially longer, with such redemptions funded from the operations of Team Sledd. These redemptions would result in corresponding increases in the percentage of the outstanding equity of Team Sledd owned by AMCON.