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Cumberland Farms, Inc.

Cumberland Farms, Inc.


777 Dedham Street
Canton, Massachusetts 02021
U.S.A.
Telephone: (781) 828-4900
Fax: (781) 828-9624
Web site: http://www.cumberlandfarms.com

Private Company
Incorporated: 1957 as Cumberland Farms Dairy, Inc.
Employees: 7,000
Sales: $3 billion (2005)
NAIC: 445120 Convenience Stores; 447110 Gasoline Stations with Convenience Stores; 447190 Other Gasoline Stations

Founded in 1939 as a one cow dairy farm, Cumberland Farms, Inc., has grown to become a billion dollar convenience store empire operating over 1,100 convenience stores and gas stations throughout New England, the Mid-Atlantic states, and Florida. Besides owning two-thirds of Gulf Oil L.P., the large independent wholesaler of branded and unbranded refined petroleum products, Cumberland Farms owns hundreds of Exxon stations in Massachusetts, New Hampshire, and New York. Cumberland Farms also conducts bakery, beverage, ice cream, grocery warehousing, and distribution operations that all supply its convenience stores and gas stations. A closely held private company since its inception, it is still primarily owned by members of the founding Haseotes family.

FROM DAIRY TO CONVENIENCE STORES

Vasilios and Aphrodite Haseotes were Greek immigrants who bought a Cumberland, Rhode Island, farm in 1939, reportedly for $84. Eventually the company they formed grew to become the largest dairy farm operation in Massachusetts, with herds of more than 3,000 cows, heifers, and calves. In 1956 the company opened a jug milk store in Bellingham, Massachusetts.

Few convenience food stores, offering dawn-to-midnight service every day of the week, existed in the 1950s, and most of them were limited to the South. By 1967, however, there were some 8,000, with more than $1 billion per year in sales. The typical convenience food store concentrated on selling milk, soft drinks, dairy products, snack items, tobacco, and, where legal, beer, also providing a parking lot with space for up to 15 automobiles. Their profit margins averaged 2.3 percent, compared with only 1.3 percent for the higher volume supermarkets. With some 400 stores, Cumberland Farms Dairy, Inc., was among the industry leaders. Most of the stores were in rural and suburban areas, where land was less expensive and crime rates lower than in the cities.

In its early years as a convenience store chain, Cumberland Farms relied heavily on sales of gallon and half gallon jugs of milk to draw in customers. These were often loss leaders, compensated for by prices on other grocery items higher than those charged by supermarkets. In 1962, when Cumberland Farms had 32 stores in four New Jersey counties, it was described as the greatest threat to the status quo in New Jersey's milk industry, which relied on state-mandated price floors. Cumberland Farms wanted to lower the price of milk by four cents a quart and contended that the reduced price would save consumers $34 million annually. To focus attention on its campaign to eliminate milk price controls in the state, it announced that it was issuing refund coupons good for 18 cents on each gallon and 9 cents on each half gallon.

Cumberland Farms tried, but failed, to overturn New Jersey's milk support law in court. It also brought suits against various New England milk pricing boards on behalf of what it called the public's right to buy lowpriced milk. In Massachusetts, however, the attorney general's office ordered Cumberland Farms in October 1973 to return at least $17,500 to customers to compensate for the alleged sale of short measured half gallon milk containers.

EXPANDING INTO GASOLINE SALES

In 1972 Cumberland Farms added, for the first time, a gas station to one of its stores. When major gasoline dealers abandoned their service stations in the wake of the 197374 Arab oil embargo, Cumberland Farms was quick to snap up choice locations in the Northeast and Florida, although the company itself had been badly hurt by the cutoff of gasoline supplies. In 1975 Cumberland Farms opened its thousandth store. The following year it also opened a 550,000-square-foot bakery and warehouse in Westborough, Massachusetts.

Cumberland Farms, in 1985, purchased 550 Gulf and Chevron service stations and related assets in ten Northeastern states for $250 million. The transaction included 25 marketing terminals and contracts to supply gasoline to about 1,700 Gulf dealers and 2,000 stations supplied by jobbers, making Cumberland Farms the largest independent seller of gasoline in the United States and also a supplier of heating oil and aviation fuel. By this time Cumberland Farms had about 1,200 stores, of which about half were selling gas.

Cumberland Farms had tried since the 1970s to build petroleum refineries in Rhode Island and Massachusetts to protect itself from any future foreign oil embargo but had been stopped by local opponents. In 1986 it purchased a mothballed oil refinery in Come-by-Chance, Newfoundland, for $1 Canadian. The purchaser of record was Newfoundland Processing Ltd., a wholly owned subsidiary of Newfoundland Energy, Ltd., a Bermuda holding company. Demetrios B. (Jim) Haseotes, chairman and chief executive officer of Cumberland Farms, was the sole owner of Newfoundland Energy and also of Cumberland Crude Processing, Inc., which supplied crude oil to the refinery and sold its refined petroleum products, receiving funds from Cumberland Farms. Newfoundland Processing and Cumberland Crude Processing were subsequently deemed unable to repay Cumberland Farms for $47 million in cash advances. The sale of the refinery in 1994 raised about $22.1 million in funds repaid to Cumberland Farms.

LEGAL CHALLENGES

Cumberland Farms received unwelcome publicity when the U.S. Environmental Protection Agency charged it, in 1985, with selling gasoline adulterated with alcohol beyond legal limits at 24 of its service stations. The company also was in trouble with environmentalists on a number of fronts. For example, it had for years drained a swamp in Plymouth County, Massachusetts, for corn planting, despite state and federal efforts to stop the action. In 1987 the U.S. Supreme Court rejected its appeal of a federal court order to pay a $540,000 fine or restore 600 acres of the swamp to its original wetlands state. Cumberland Farms won a round in 1992, however, when a federal appeals court upheld a ruling clearing the company of responsibility for the pollution of water wells serving 40,000 people in Dedham and Westwood, Massachusetts.

COMPANY PERSPECTIVES


The Cumberland Farms mission today remains the same as it was when the company was founded in 1939 by Vasilios and Aphrodite Haseotes, a young Greek immigrant couple: To support today's time-strapped customers with convenient access to the best possible service and high quality products at the lowest possible prices.

Cumberland Farms withdrew from agriculture in 1986, selling 5,000 acres of Cape Cod land, along with a cranberry processing plant and freezer facilities, for $30 million. At about the same time it closed down its 400 acre dairy farm in Bridgewater, Massachusetts, pocketing $2.7 million from the federal government to slaughter the herd under a program designed to cut the nation's chronic oversupply of milk. The company next proposed to establish a $150 million waste-to-energy incinerator on 400 acres of its Bridgewater farm. The site, however, was found to contain hazardous waste substances in water and soil samples.

GROWING SALES AND DEBT: 199092

Bad publicity did not seem to be hurting the company's bottom line, however. Annual sales for its 1,150 stores was estimated as high as $3 billion in 1990. The company, while closing more than 300 of its less profitable stores, refurbished other ones. Fast foods, including sandwiches heated in microwave ovens, had been added to the 3,000 to 3,500 items sold in its stores, which included goods from the company's own bakery. Some stores also rented videotapes. To cut labor costs and increase reporting efficiency, Cumberland Farms introduced a personal computer sales and ordering system in its outlets, uploading the data nightly to the mainframe at corporate headquarters in Canton, Massachusetts. A more advanced system was introduced in 1995, supporting back office functions, point-of-sale transactions, and scanning.

The fuel business, however, was proving more contentious. In 1991 Cumberland Farms decided to cut off supplies to gasoline jobbers in favor of the company's own service stations. As a result breach of contract suits were filed in several states, and about 100 distributors simply dropped the Gulf brand. In early 1992 Cumberland Farms agreed to sell one-third of its fuel marketing business, including day-to-day control, to Catamount Petroleum Corporation for more than $125 million. A limited partnership, Gulf Oil L.P., was to be formed, with Cumberland Farms holding the majority interest, while Catamount marketed the gasoline and other light petroleum products as the minority partner.

The creation of this limited partnership was delayed because, on May 1, 1992, Cumberland Farms, which had been buffeted by the recession of the early 1990s, unexpectedly filed for Chapter 11 bankruptcy protection. It placed responsibility for the action on the Industrial Bank of Japan Trust Co., which replied that the company had defaulted on a $175 million loan that the bank had renegotiated several times since 1988 and owed $65 million to a banking syndicate it led.

In October 1993, a federal judge approved a reorganization plan that proposed paying Cumberland Farms' creditors in full. The plan allowed the company to stretch payments over ten years to secured creditors owed more than $300 million, including International Bank of Japan and Chevron Corporation. Unsecured creditors, who held about $35 million in debt, were to be paid over five years, without interest. An outsider controlled board was established to oversee plans to close stores and reduce staff as well as to pay the creditors. Company lawyers said Cumberland Farms had earned $13 million on revenue of $1.2 billion in 1992.

REEMERGENCE FROM BANKRUPTCY

Cumberland Farms emerged from 18 months of bankruptcy in December 1993 under this reorganization plan. The Gulf Oil L.P. joint venture went into effect in 1994, selling primarily to the convenience stores and service stations owned by Cumberland. A fiscal 1995 disclosure filing to the Securities and Exchange Commission, however, listed $11.9 million in payments of debt at less than face value and forgiveness of debt. The outsider-directed company also charged breach of fiduciary duties and violations of the reorganization plan in connection with acquisitions by an affiliate of Jim Haseotes of certain of the company's certificates. Following a court order unfavorable to Haseotes, the company purchased the certificates from this affiliate. The company also instituted legal proceedings to seek, in its words, "an accounting and possible disgorgement of funds received by Mr. Haseotes in connection with the sale of the refinery and an accounting of funds distributed to Mr. Haseotes to pay certain tax liabilities."

KEY DATES


1939:
Cumberland Farms is founded by Vasilios and Aphrodite Haseotes in Cumberland, Rhode Island.
1972:
First self-serve gasoline pumps are installed at a Cumberland Farms store in Putnam, Connecticut.
1975:
A total of 100 Cumberland Farms stores have been equipped with gas facilities.
1985:
Cumberland Farms purchases 550 Gulf and Chevron gas stations.
1994:
Cumberland Farms and Boston's Catamount Management Inc. create Gulf Oil Limited.
2003:
Cumberland Farms purchases 200 Exxon gas stations; Harry Brenner becomes the first nonfamily member to be named company president.

At the end of fiscal 1995, Cumberland Farms consisted of three divisions. The Cumberland Farms division included the convenience store, retail gasoline, and manufacturing operations. The Gulf Oil division marketed refined petroleum products on a wholesale basis to lessee dealers as well as to company operated locations. The VSH Realty division acquired and constructed real property for lease to the other divisions of the company and others for use as retail and wholesale sales locations.

In late 1993 Cumberland Farms had about 900 convenience stores and about 2,000 Gulf gasoline stations operating in New England, the Mid-Atlantic states, and Florida. Its revenues rose from $1.1 billion in 1993 to $1.19 billion in 1994 and $1.32 billion in 1995. These figures did not include Gulf Oil L.P., whose assets included a 5.5-billion-barrel gasoline storage system made up of 14 terminals in the eastern United States, including a massive "tank farm" on Neville Island, Pennsylvania. Gulf Oil's revenues were in excess of those of Cumberland Farms itself. It had sales of $1.34 billion in fiscal 1994 and $1.82 billion in fiscal 1995. Net income came to $15.1 million and $20.7 million, respectively.

PETROLEUM PRODUCT EXPANSION IN THE NEW CENTURY

Cumberland Farms made strides in the new millennium to reduce overhead costs. Many of the maintenance technicians employed by Cumberland Farms to oversee mechanical systems, electrical, parking lot, roof, fence, and other facility services were spending an estimated 50 percent of their time just driving between store locations. The technicians' wasted time commuting prevented Cumberland Farms from allocating more funds for such things as preventive maintenance. In 2002 the company hired UNICCO Service Company, a facilities services outsourcing company, to maintain over 500 convenience stores and other Cumberland Farms locations along the east coast. Although the deal resulted in some layoffs for Cumberland Farms maintenance technicians, most were immediately offered jobs with UNICCO, which reduced the technicians' transportation time by increasing customer density.

In mid-2003 Cumberland Farms expanded its footprint in the petroleum market by acquiring 200 Exxon branded service stations from the international energy company ConocoPhillips. "Our strategy is to expand our branded petroleum marketing presence within the Northeast and make Gulf and Exxon the service stations of choice," the president and chief executive officer of Cumberland Farms, Lily H. Bentas, was quoted by Business Wire. "Bringing the Exxon flag into the Cumberland Farms family is a big step in reaching this goal, as well as in reaching a whole new set of customers," she continued.

Spokespeople from both companies considered the transaction beneficial. In addition to purchasing the Exxon stores from ConocoPhillips, Cumberland Farms began supplying ConocoPhillips's other New England and New York locations with motor fuels produced by Gulf Oil L.P. ConocoPhillips's sale of the Exxon locations helped it pay down debt. It also continued to distribute fuel to the Cumberland Farms newly owned Exxon stations.

The additional locations boosted Cumberland Farms' store count to an estimated 1,100 units by late 2003. Gulf was also supplying thousands of independent petroleum-product dealers with gasoline, diesel, and heating oils throughout New England, the Mid-Atlantic states, and Florida. After its purchase of the 200 Exxon branded stations, Cumberland Farms shifted priorities to integrate its suddenly larger management pool and maintain a high level of customer service. For the first time in Cumberland Farms' history a president was appointed who was not a member of the Haseotes family. Harry Brener, with more than 20 years experience at Cumberland Farms, became president and chief operating officer in 2003. To improve customer service, stores were retrofitted with wider aisles and centrally located registers. Stores began offering healthier snacks. Interiors were painted in earth tones in an attempt to make the stores seem more welcoming.

Cumberland Farms' priority shift and continual expansion proved successful. Revenue jumped from $2 billion in 2003 to $2.1 billion in 2004. Revenue skyrocketed 42.9 percent between 2004 and 2005 and reached the $3 billion mark. Over that three-year growth period, Cumberland Farms maintained its overhead at about 7,000 part-time and full-time employees. In early 2006 Cumberland Farms owned 200 Exxon branded gas stations, approximately 200 Gulf branded gas stations, and 600 Cumberland Farms stores equipped with gasoline pumps.

Robert Halasz

Updated, Kevin Teague

PRINCIPAL OPERATING UNITS

Cumberland Farms; Gulf Oil; VSH Realty.

PRINCIPAL COMPETITORS

7-Eleven, Inc.; BP plc.

FURTHER READING

Biddle, Frederic M., "Cumberland Farms Seeks Bankruptcy Protection," Boston Globe, May 2, 1992, pp. 1, 13.

"ConocoPhillips Sells Retail," Platts Oilgram News, June 6, 2003, p. 7.

Cotter, Wes, "New Venture Tries to Boost Gulf Name in Pittsburgh Area," Pittsburgh Business Times, January 31, 1994, pp. 12.

"Cumberland Farms and Gulf Oil Limited Partnership Acquire the Exxon-Branded Distribution Business," Business Wire, June 5, 2003.

"Cumberland Farms Dairy Facility Auctions Off Its Heavy Machinery," Boston Globe, April 26, 1987, p. 39.

"Cumberland Farms Selects UNICCO to Keep Them Going with Route Maintenance at Over 500 Stores," Business Wire, November 18, 2002.

Dumanoski, Dianne, "High Court Upholds Order on Restoration of Wetlands," Boston Globe, February 23, 1987, pp. 17, 22.

Gorov, Linda, "Cumberland Buying 520 Chevron Units," Boston Globe, November 9, 1985, p. 8.

Hammer, Joshua, "Fear in the Back Room," Newsweek, September 24, 1990, p. 64.

Kostrzewa, John, "Biz Bits @ Qips," Providence Journal, June 8, 2003, p. F-02.

Lofstock, John, "Cumberland Farms Strengthens Position," Convenience Store News, July 14, 2003, p. 8.

Marder, Dianna, "Security Pair Describes Cumberland Policy," Boston Globe, August 16, 1990, pp. 5556.

McKibben, Gordon, "Making Money, Not Friends, Far from the Farm," Boston Globe, January 20, 1987, pp. 39, 43.

Morgan, Thomas J., "Cumberland Farms Makes Case for Gas Pumps," Providence Journal, May 30, 2002, p. C-01.

Pastore, Richard, "Cumberland Looks to PCs to Compete in Crowded Field," Computerworld, August 27, 1990, pp. 33, 40.

Russell, Gerard F., "Cumberland Farms Rises Out of Ch. 11," Boston Globe, October 23, 1993, p. 29.

Sullivan, Joseph, "Politicians Make Milk an Issue," New York Times, August 5, 1973, p. 65.

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Halasz, Robert; Teague, Kevin. "Cumberland Farms, Inc." International Directory of Company Histories. 2007. Encyclopedia.com. 1 Jul. 2016 <http://www.encyclopedia.com>.

Halasz, Robert; Teague, Kevin. "Cumberland Farms, Inc." International Directory of Company Histories. 2007. Encyclopedia.com. (July 1, 2016). http://www.encyclopedia.com/doc/1G2-3480000025.html

Halasz, Robert; Teague, Kevin. "Cumberland Farms, Inc." International Directory of Company Histories. 2007. Retrieved July 01, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3480000025.html

Cumberland Farms, Inc.

Cumberland Farms, Inc.

777 Dedham Street
Canton, Massachusetts 02021
U.S.A.
(617) 828-4900
Fax: (617) 828-9012

Private Company
Incorporated: 1957 as Cumberland Farms Dairy, Inc.
Employees: 3,800
Sales: $1.32 billion (1995)

SICs: 2051 Bread & Other Bakery Products, Except Cookies & Crackers; 5172 Petroleum & Petroleum Products Wholesalers, Except Bulk Stations & Terminals; 5411 Grocery Stores; 5541 Gasoline Service Stations

Founded in 1938 as a one-cow dairy farm, Cumberland Farms, Inc. grew to become a billion-dollar-a-year corporation. In the early 1990s it ranked third among the nationconvenience store chains and was also a leader in both the retail and wholesale distribution of petroleum products. A closely held private company since its inception, it was still fully owned in the 1990s by members of the founding Haseotes family.

From Dairying to Convenience Stores

Vasilios and Aphrodite Haseotes were Greek immigrants who bought a Cumberland, Rhode Island, farm in 1938, reportedly for $84. Eventually the company they formed grew to become the largest dairy farm operation in Massachusetts, with herds of more than 3,000 cows, heifers, and calves. In 1956 the company opened a jug-milk store in Bellingham, Massachusetts.

Few convenience food stores, offering dawn-to-midnight service every day of the week, existed in the 1950s, and most of them were limited to the South. By 1967, however, there were some 8,000, with more than $1 billion per year in sales. The typical convenience food store concentrated on selling milk, soft drinks, dairy products, snack items, tobacco, and, where legal, beer, also providing a parking lot with space for up to 15 automobiles. Their profit margins averaged 2.3 percent, compared with only 1.3 percent for the higher-volume supermarkets. With some 400 stores, Cumberland Farms Dairy, Inc. was among the industry leaders. Most of the stores were in rural and suburban areas, where land was cheaper and crime rates lower than in the cities.

In its early years as a convenience store chain, Cumberland Farms relied heavily on sales of gallon and half-gallon jugs of milk to draw in customers. These were often loss leaders, compensated for by prices on other grocery items higher than those charged by supermarkets. In 1962, when Cumberland Farms had 32 stores in four New Jersey counties, it was described as the greatest threat to the status quo in New Jerseys milk industry, which relied on state-mandated price floors. Cumberland Farms wanted to lower the price of milk by four cents a quart and contended that the reduced price would save consumers $34 million annually. To focus attention on its campaign to eliminate milk price controls in the state, it announced that it was issuing refund coupons good for 18 cents on each gallon and nine cents on each half gallon.

Cumberland Farms tried, but failed, to overturn New Jerseys milk-support law in court. It also brought suits against various New England milk-pricing boards on behalf of what it called the publics right to buy low-priced milk. In Massachusetts, however, the attorney generals office ordered Cumberland Farms in October 1973 to return at least $17,500 to customers to compensate for the alleged sale of short measured half-gallon milk containers.

Expanding into Gasoline Sales in the 1970s

In 1970 Cumberland Farms added, for the first time, a gas station to one of its stores. When major gasoline dealers abandoned their service stations in the wake of the 1973-1974 Arab oil embargo, Cumberland Farms was quick to snap up choice locations in the Northeast and Florida, although the company itself had been badly hurt by the cutoff of gasoline supplies. In 1975 Cumberland Farms opened its thousandth store. The following year it also opened a 550,000-square-foot bakery and warehouse in Westborough, Massachusetts.

Cumberland Farms, in 1985, purchased 550 Gulf and Chevron service stations and related assets in ten Northeastern states for $250 million. The transaction included 25 marketing terminals and contracts to supply gasoline to about 1,700 Gulf dealers and 2,000 stations supplied by jobbers, making Cumberland Farms the largest independent seller of gasoline in the United States and also a supplier of heating oil and aviation fuel. By this time Cumberland Farms had about 1,200 stores, of which about half were selling gas.

Cumberland Farms had tried since the 1970s to build petroleum refineries in Rhode Island and Massachusetts to protect itself from any future foreign oil embargo but had been stopped by local opponents. In 1986 it purchased a mothballed oil refinery in Come-by-Chance, Newfoundland, for $1 Canadian. The purchaser of record was Newfoundland Processing Ltd., a wholly owned subsidiary of Newfoundland Energy, Ltd., a Bermuda holding company. Demetrios B. (Jim) Haseotes, chairman and chief executive officer of Cumberland Farms, was the sole owner of Newfoundland Energy and also of Cumberland Crude Processing, Inc., which supplied crude oil to the refinery and sold its refined petroleum products, receiving funds from Cumberland Farms. Newfoundland Processing and Cumberland Crude Processing were subsequently deemed unable to repay Cumberland Farms for $47 million in cash advances. The sale of the refinery in 1994 raised about $22.1 million in funds repaid to Cumberland Farms.

Legal Challenges in the 1980s

Cumberland Farms received unwelcome publicity when the U.S. Environmental Protection Agency charged it, in 1985, with selling gasoline adulterated with alcohol beyond legal limits at 24 of its service stations. The company also was in trouble with environmentalists on a number of fronts. For example, it had for years drained a swamp in Plymouth County, Massachusetts for corn planting, despite state and federal efforts to stop the action. In 1987 the U.S. Supreme Court rejected its appeal of a federal court order to pay a $540,000 fine or restore 600 acres of the swamp to its original wetlands state. Cumberland Farms won a round in 1992, however, when a federal appeals court upheld a ruling clearing the company of responsibility for the pollution of water wells serving 40,000 people in Dedham and West-wood, Massachusetts.

Cumberland Farms withdrew from agriculture in 1986, selling 5,000 acres of Cape Cod land, along with a cranberry processing plant and freezer facilities, for $30 million. At about the same time it closed down its 400-acre dairy farm in Bridge-water, Massachusetts, pocketing $2.7 million from the federal government to slaughter the herd under a program designed to cut the nations chronic oversupply of milk. The company next proposed to establish a $150 million waste-to-energy incinerator on 400 acres of its Bridgewater farm. The site, however, was found to contain hazardous waste substances in water and soil samples.

A full-fledged scandal struck Cumberland Farms in 1990, when two former company officials said the company had a longstanding policy of coercing confessions of theft from employees, often without corroborating evidence. Some 275 former company cashiers, several of whom filed lawsuits, said they had been falsely accused of stealing, intimidated by company officials into signing false confessions, and forced to pay the company money as restitution. The story made headlines in many newspapers and Newsweek and was also featured on the television program 60 Minutes.

Growing Sales and Debt

Bad publicity did not seem to be hurting the companys bottom line, however. Annual sales for its 1,150 stores was estimated as high as $3 billion in 1990. The company, while closing more than 300 of its less profitable stores, refurbished other ones. Fast foods, including sandwiches heated in microwave ovens, had been added to the 3,000 to 3,500 items sold in its stores, which included goods from the companys own bakery. Some stores also rented videotapes. To cut labor costs and increase reporting efficiency, Cumberland Farms introduced a personal computer sales and ordering system in its outlets, uploading the data nightly to the mainframe at corporate headquarters in Canton, Massachusetts. A more advanced system was introduced in 1995, supporting back-office functions, point-of-sale transactions, and scanning.

The fuel business, however, was proving more contentious. In 1991 Cumberland Farms decided to cut off supplies to gasoline jobbers in favor of the companys own service stations. As a result breach-of-contract suits were filed in several states, and about 100 distributors simply dropped the Gulf brand. In early 1992 Cumberland Farms agreed to sell one-third of its fuel marketing business, including day-to-day control, to Catamount Petroleum Corp. for more than $125 million. A limited partnership, Gulf Oil L.P., was to be formed, with Cumberland Farms holding the majority interest, while Catamount marketed the gasoline and other light petroleum products as the minority partner.

The creation of this limited partnership was delayed because, on May 1, 1992, Cumberland Farms, which had been buffeted by the recession of the early 1990s, unexpectedly filed for Chapter 11 bankruptcy protection. It placed responsibility for the action on the Industrial Bank of Japan Trust Co., which replied that the company had defaulted on a $175 million loan that the bank had renegotiated several times since 1988 and owed $65 million to a banking syndicate it led.

Cumberland Farms reportedly had a long history of slow payments to creditors. In addition, the companys revolving-door management was reported to have given creditors the jitters, according to a 1992 Boston Globe story. Francis Alger became the first nonfamily executive to serve as president of Cumberland Farms, in 1986. Peter G. Pantazelos, brother-in-law of Jim Haseotes, succeeded Haseotes as chairman and chief executive officer of the company in March 1989 but resigned just six months after assuming the job. He was succeeded as chief executive by Richard A. Jensen, not a family member. Lily Haseotes Bentas, sister of Jim Haseotes, was appointed chairman and president of the company at the same time. According to a court document, Bentas, George Haseotes, and Byron Haseotes owned three-quarters of the companys stock in 1992.

In October 1993, a federal judge approved a reorganization plan that proposed paying Cumberland Farms creditors in full. The plan allowed the company to stretch payments over ten years to secured creditors owed more than $300 million, including International Bank of Japan and Chevron Corp. Unsecured creditors, who held about $35 million in debt, were to be paid over five years, without interest. An outsider-controlled board was established to oversee plans to close stores and reduce staff as well as to pay the creditors. Company lawyers said Cumberland Farms had earned $13 million on revenue of $1.2 billion in 1992.

Reemergence from Bankruptcy in the 1990s

Cumberland Farms emerged from 18 months of bankruptcy in December 1993 under this reorganization plan. The Gulf Oil L.P. joint venture went into effect in 1994, selling primarily to the convenience stores and service stations owned by Cumberland. A fiscal 1995 disclosure filing to the Securities and Exchange Commission, however, listed $11.9 million in payments of debt at less than face value and forgiveness of debt. The outsider-directed company also charged breach of fiduciary duties and violations of the reorganization plan in connection with acquisitions by an affiliate of Jim Haseotes of certain of the companys certificates. Following a court order unfavorable to Haseotes, the company purchased the certificates from this affiliate. The company also instituted legal proceedings to seek, in its words, an accounting and possible disgorgement of funds received by Mr. Haseotes in connection with the sale of the refinery and an accounting of funds distributed to Mr. Haseotes to pay certain tax liabilities.

At the end of fiscal 1995, Cumberland Farms consisted of three divisions. The Cumberland Farms division included the convenience store, retail gasoline, and manufacturing operations. The Gulf Oil division marketed refined petroleum products on a wholesale basis to lessee dealers as well as to company-operated locations. The VSH Realty division acquired and constructed real property for lease to the other divisions of the company and others for use as retail and wholesale sales locations.

In late 1993 Cumberland Farms had about 900 convenience stores and about 2,000 Gulf gasoline stations operating in New England, the mid-Atlantic states, and Florida. Its revenues rose from $1.1 billion in fiscal 1993 (the fiscal year ending September 30, 1993) to $1.19 billion in fiscal 1994 and $1.32 billion in fiscal 1995. Net income was $7.7 million in fiscal 1993, followed by a loss of $1.7 million in fiscal 1994 and a net profit of $34.8 million in fiscal 1995. The long-term debt was $236.7 million at the end of fiscal 1995.

These figures did not include Gulf Oil L.P., whose assets included a 5.5-billion-barrel gasoline storage system made up of 14 terminals in the eastern United States, including a massive tank farm on Neville Island, Pennsylvania. Gulf Oils revenues were in excess of those of Cumberland Farms itself. It had sales of $1.34 billion in fiscal 1994 and $1.82 billion in fiscal 1995. Net income came to $15.1 million and $20.7 million, respectively.

Principal Operating Units

Cumberland Farms; Gulf Oil; VSH Realty.

Further Reading

Biddle, Frederic M, Cumberland Farms Seeks Bankruptcy Protection, Boston Globe, May 2, 1992, pp. 1, 13.

Cotter, Wes, New Venture Tries To Boost Gulf Name in Pittsburgh Area, Pittsburgh Business Times, January 31, 1994, pp. 1-2.

Cumberland Farms Dairy Facility Auctions Off Its Heavy Machinery, Boston Globe, April 26, 1987, p. 39.

Dumanoski, Dianne, High Court Upholds Order on Restoration of Wetlands, Boston Globe, February 23, 1987, pp. 17, 22.

Gorov, Linda, Cumberland Buying 520 Chevron Units, Boston Globe, November 9, 1985, p. 8.

Hammer, Joshua, Fear in the Back Room, Newsweek, September 24, 1990, p. 64.

McKibben, Gordon, Making Money, Not Friends, Far from the Farm, Boston Globe, January 20, 1987, pp. 39, 43.

Marder, Dianna, Security Pair Describes Cumberland Policy, Boston Globe, August 16, 1990, pp. 55-56.

Pastore, Richard, Cumberland Looks to PCs To Compete in Crowded Field, Computerworld, August 27, 1990, pp. 33, 40.

Russell, Gerard F., Cumberland Farms Rises Out of Ch. 11, Boston Globe, October 23, 1993, p. 29.

Sullivan, Joseph, Politicians Make Milk an Issue, New York Times, August 5, 1973, p. 65.

Robert Halasz

Cite this article
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"Cumberland Farms, Inc." International Directory of Company Histories. 1997. Encyclopedia.com. 1 Jul. 2016 <http://www.encyclopedia.com>.

"Cumberland Farms, Inc." International Directory of Company Histories. 1997. Encyclopedia.com. (July 1, 2016). http://www.encyclopedia.com/doc/1G2-2842100041.html

"Cumberland Farms, Inc." International Directory of Company Histories. 1997. Retrieved July 01, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-2842100041.html

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