As filed with the Securities and Exchange Commission on May 30, 2017

Registration No. 333-217547

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

GPM Petroleum LP

(Exact name of registrant as specified in its charter)

Delaware

5172

47-3590088

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

8565 Magellan Parkway, Suite 400

Richmond, Virginia 23227

(804) 887-1980

(Address, including zip code, and telephone number, Including area code, of registrant’s principal executive offices)

Arie Kotler

8565 Magellan Parkway, Suite 400

Richmond, Virginia 23227

(804) 887-1980

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

David P. Oelman

Gillian A. Hobson

Vinson & Elkins L.L.P.

1001 Fannin Street, Suite 2500

Houston, Texas 77002

(713) 758-2222

Joshua Davidson

Andrew J. Ericksen

Baker Botts L.L.P.

910 Louisiana Street

Houston, Texas 77002

(713) 229-1234

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒ (Do not check if a smaller reporting company)	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☒

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion

Preliminary Prospectus dated May 30, 2017

PROSPECTUS

LOGO

Common Units

Representing Limited Partner Interests

GPM Petroleum LP

This is the initial public offering of our common units representing limited partner interests. Prior to this offering, there has been no public market for our common units. We currently expect the initial public offering price to be between $ and $ per common unit. We expect to grant the underwriters an option to purchase up to additional common units. We intend to apply to list our common units on the New York Stock Exchange under the symbol “GPMP.”

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012, and as such, we have elected to take advantage of certain reduced public company reporting requirements for this prospectus and future filings. See “Risk Factors” and “Summary—Emerging Growth Company.”

Investing in our common units involves risks. See “Risk Factors” beginning on page 24.

These risks include the following:

•

GPM is our largest customer, and we are dependent on GPM for a substantial majority of our revenues. Therefore, we are indirectly subject to the business risks of GPM. If GPM changes its business strategy, is unable to satisfy its obligations under the GPM Distribution Contracts, or significantly reduces the volume of motor fuel it purchases under such contracts, our revenues will decline and our financial condition, results of operations, cash flows and ability to make distributions to our unitholders will be adversely affected.

•

On an as adjusted basis we would not have had a sufficient amount of cash available to pay the full minimum quarterly distribution on all of our common units and subordinated units for the twelve months ended March 31, 2017 and the year ended December 31, 2016.

•

We may not have sufficient cash from operations following the establishment of cash reserves and payment of costs and expenses, including cost reimbursements to our general partner, to enable us to pay the minimum quarterly distribution to our unitholders. Furthermore, we do not have a legal obligation to pay quarterly distributions at our minimum quarterly distribution rate or at any other rate.

•

GPM owns and controls our general partner, which has sole responsibility for conducting our business and managing our operations. Our general partner and its affiliates, including GPM, have conflicts of interest with us and limited fiduciary duties to us, and they may favor their own interests to the detriment of us and our unitholders.

•

Our general partner may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to its incentive distribution rights, without the approval of the conflicts committee of our general partner’s board of directors or the holders of our common units. This could result in lower distributions to holders of our common units.

•

Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors, which could reduce the price at which our common units will trade.

•

There is no existing market for our common units, and a trading market that will provide unitholders with adequate liquidity may not develop. The price of our common units may fluctuate significantly, and unitholders could lose all or part of their investment.

•

Our tax treatment depends on our status as a partnership for U.S. federal income tax purposes, as well as us not being subject to a material amount of entity-level taxation by individual states. If the Internal Revenue Service were to treat us as a corporation for U.S. federal income tax purposes, or we become subject to entity-level taxation for state tax purposes, our cash available for distribution to our unitholders would be substantially reduced.

•

Even if unitholders do not receive any cash distributions from us, unitholders will be required to pay taxes on their share of our taxable income.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


	Per Common Unit	Total
Public offering price	$	$
Underwriting discount (1)	$	$
Proceeds to GPM Petroleum LP (before expenses)	$	$

(1)	Excludes a structuring fee in the amount of $ payable to Raymond James & Associates, Inc. Please read “Underwriting.”

The underwriters expect to deliver the common units to purchasers on or about , 2017 through the book-entry facilities of The Depository Trust Company.

Joint Book-Running Managers


RAYMOND JAMES		WELLS FARGO SECURITIES
RBC CAPITAL MARKETS

Co-Managers


BAIRD		WUNDERLICH		CAPITAL ONE SECURITIES

The date of this prospectus is , 2017.

The following map illustrates the geographic location of GPM sites owned and leased as of May 15, 2017:

LOGO

TABLE OF CONTENTS


SUMMARY			1
GPM Petroleum LP			1
Our Relationship with GPM Investments, LLC			4
Our Strengths and Strategies			5
Risk Factors			7
Our Management			7
Summary of Conflicts of Interest and Fiduciary Duties			8
Principal Executive Offices			9
Formation Transactions and Partnership Structure			9
Organizational Structure			11
Emerging Growth Company			12
The Offering			13
Summary Historical Financial and Operating Data			19
Non-GAAP Financial Measures			21
RISK FACTORS			24
Risks Inherent in Our Business			24
Risks Inherent in an Investment in Us			38
Tax Risks to Common Unitholders			50
USE OF PROCEEDS			56
CAPITALIZATION			57
DILUTION			58
CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS			59
General			59
Our Minimum Quarterly Distribution			61
Subordinated Units			62
Unaudited As Adjusted Cash Available for Distribution for the Year Ended December 31, 2016 and the Twelve Months Ended March 31, 2017			63
Unaudited Estimated Cash Available for Distribution for the Twelve Months Ending June 30, 2018			65
Significant Forecast Assumptions			69
HOW WE MAKE DISTRIBUTIONS TO OUR PARTNERS			74
General			74
Operating Surplus and Capital Surplus			74
Capital Expenditures			77
Subordination Period			78
Distributions From Operating Surplus During the Subordination Period			80
Distributions From Operating Surplus After the Subordination Period			80
General Partner Interest			80
Incentive Distribution Rights			81
Percentage Allocations of Distributions From Operating Surplus			81


Our General Partner’s Right to Reset Incentive Distribution Levels			82
Distributions From Capital Surplus			85
Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels			85
Distributions of Cash Upon Liquidation			86
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA			89
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			92
Overview			92
Our Predecessor—GPM Investments, LLC			94
Factors Impacting the Comparability of Our Financial Results			94
How We Evaluate and Assess Our Business			97
Market and Industry Trends and Outlook			97
Historical Results of Operations			98
Liquidity and Capital Resources			102
Off-Balance Sheet Arrangements			106
Impact of Inflation			107
Quantitative and Qualitative Disclosures about Market Risk			107
Recent Accounting Pronouncements			107
INDUSTRY			109
BUSINESS			114
Overview			114
Our Agreements with GPM			117
Our Strengths and Strategies			117
Our Business and Properties			119
Competition			123
Seasonality			124
Insurance			124
Environmental and Occupational Safety and Health Matters			124
Occupational Safety and Health			127
Other Government Regulation			127
Title to Properties, Permits and Licenses			128
Our Employees			128
Legal Proceedings			128
MANAGEMENT			129
Management of GPM Petroleum LP			129
Executive Officers and Directors of our General Partner			130
Director Independence			132
Committees of the Board of Directors			132
EXECUTIVE COMPENSATION			134
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			140
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			142


Distributions and Payments to Our General Partner and Its Affiliates			142
Agreements with Affiliates in Connection with the Formation Transactions			144
Other Transactions with Related Persons			147
CONFLICTS OF INTEREST AND FIDUCIARY DUTIES			149
Conflicts of Interest			149
Fiduciary Duties			156
DESCRIPTION OF THE COMMON UNITS			159
The Units			159
Transfer Agent and Registrar			159
Transfer of Common Units			159
THE PARTNERSHIP AGREEMENT			161
Organization and Duration			161
Purpose			161
Cash Distributions			161
Capital Contributions			161
Voting Rights			162
Applicable Law; Exclusive Forum			163
Limited Liability			163
Issuance of Additional Partnership Interests			165
Amendment of the Partnership Agreement			165
Dissolution			168
Liquidation and Distribution of Proceeds			169
Withdrawal or Removal of Our General Partner			169
Transfer of General Partner Interest			170
Transfer of Ownership Interests in the General Partner			171
Transfer of Subordinated Units and Incentive Distribution Rights			171
Change of Management Provisions			172
Limited Call Right			172
Non-Taxpaying Holders; Redemption			172
Non-Citizen Assignees; Redemption			173
Meetings; Voting			173
Voting Rights of Incentive Distribution Rights			174
Status as Limited Partner			174
Indemnification			175
Reimbursement of Expenses			175
Books and Reports			175
Right to Inspect Our Books and Records			176
Registration Rights			176
UNITS ELIGIBLE FOR FUTURE SALE			178
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES			180
Taxation of the Partnership			181

iii


Tax Consequences of Unit Ownership			182
Tax Treatment of Operations			188
Disposition of Units			189
Uniformity of Units			192
Tax-Exempt Organizations and Other Investors			192
Administrative Matters			193
State, Local and Other Tax Considerations			196
INVESTMENT IN GPM PETROLEUM LP BY EMPLOYEE BENEFIT PLANS			197
UNDERWRITING			199
Option to Purchase Additional Common Units			199
Discounts and Expenses			199
Indemnification			200
Lock-Up Agreements			200
Stabilization			200
Relationships			201
Discretionary Accounts			201
Directed Unit Program			201
Listing			202
Determination of Initial Offering Price			202
Electronic Prospectus			202
FINRA Conduct Rules			203
VALIDITY OF OUR COMMON UNITS			203
EXPERTS			203
WHERE YOU CAN FIND MORE INFORMATION			203
FORWARD-LOOKING STATEMENTS			204
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1
APPENDIX A—FORM OF THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF GPM PETROLEUM LP			A-1

Until , 2017 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common units, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

We have not, and the underwriters have not, authorized anyone to provide you with information different from that contained in this prospectus and any free writing prospectus we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.

You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the cover of this prospectus. This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. Please read “Forward-Looking Statements” and “Risk Factors.”

Industry and Market Data

This prospectus includes industry data and forecasts that we obtained from industry publications and surveys, public filings and internal company sources. Statements as to our market position and market estimates are based on independent industry publications, government publications, third-party forecasts, management’s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding the market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings “Forward-Looking Statements” and “Risk Factors” in this prospectus.

Trademarks and Trade Names

We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of GPM and third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and should not be read to, imply a relationship with or endorsement or sponsorship of us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ^®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names.

SUMMARY

This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the historical financial statements and the notes to those financial statements, before investing in our common units. Unless otherwise indicated, the information presented in this prospectus assumes (1) an initial public offering price of $ per common unit (the midpoint of the price range set forth on the cover page of this prospectus) and (2) that the underwriters do not exercise their option to purchase additional common units. You should read “Risk Factors” for information about important risks that you should consider before buying our common units.

Unless the context otherwise requires, references in this prospectus to “GPM Petroleum LP,” the “partnership,” “we,” “our,” “us” or like terms refer to GPM Petroleum LP, a Delaware limited partnership, and its subsidiary. All references in this prospectus, unless the context otherwise requires, to the terms “Predecessor,” “our predecessor,” “GPM,” “our sponsor,” “we,” “our,” “us” or like terms refer to GPM Investments, LLC and its consolidated subsidiaries, our predecessor for accounting purposes for periods prior to January 1, 2016, which is the owner of our general partner. References in this prospectus to “our general partner” refer to GPM Petroleum GP, LLC, a Delaware limited liability company and the general partner of the partnership.

References in this prospectus to “lessee dealers” refer to third parties that operate sites that we or GPM own or lease and that we or GPM, in turn, lease or sublease to such third parties; “independent dealers” refer to third parties that own their sites or lease their sites from a landlord other than us or GPM; and “sub-wholesalers” and “bulk purchasers” refer to third parties that elect to purchase motor fuels from us, on a wholesale basis, instead of purchasing directly from major integrated oil companies and independent refiners.

GPM Petroleum LP

We are a growth-oriented Delaware limited partnership formed by GPM to engage in the wholesale distribution of motor fuels on a fixed fee per gallon basis to GPM-controlled convenience stores and third parties. We commenced operations on January 12, 2016 (the “Formation Date”). As of March 31, 2017, GPM, the seventh largest convenience store chain in the United States ranked by store count, controlled 805 convenience stores that sell motor fuel, merchandise, food, beverages and other products and services to retail customers in the Mid-Atlantic, Southeastern, Midwestern and Northeastern United States. GPM is obligated to purchase all of its motor fuel from us under 10-year wholesale motor fuel distribution agreements (the “GPM Distribution Contracts”). For the three months ended March 31, 2017 and the year ended December 31, 2016, we distributed approximately 180.0 million and 660.8 million gallons of motor fuel, respectively, to GPM-controlled sites and 1.4 million and 6.3 million gallons of motor fuel, respectively, to third-party customers. We believe we are one of the largest independent motor fuel distributors by number of convenience stores in the United States, the largest distributor of Valero-branded motor fuel on the East Coast and the third largest distributor of Valero-branded motor fuel in the United States. In addition, we receive rental income from real estate that we own and lease to third parties.

As described in more detail below in “—Our Relationship with GPM Investments, LLC—Our Agreements with GPM” and “—Formation Transactions and Partnership Structure,” we commenced operations when we entered into our initial fuel distribution contracts in January 2016 and closed a $70.0 million private placement to investment funds managed by OFI SteelPath, Inc. (“SteelPath” and such funds, the “SteelPath Funds”) a leading innovator in developing MLP investment products. SteelPath was first to market with MLP-focused open-end mutual funds,

providing investors convenient access to this growing asset class. As of March 31, 2017, SteelPath’s assets under management were approximately $12.47 billion.

Our primary business objective is to make stable quarterly cash distributions to our unitholders and, over time, to increase our quarterly cash distributions. We intend to make minimum quarterly distributions of $ per unit per quarter (or $ per unit on an annualized basis), as further described in “Cash Distribution Policy and Restrictions on Distributions.”

We purchase motor fuel primarily from major integrated oil companies and independent refiners and distribute it to GPM pursuant to the GPM Distribution Contracts. As of March 31, 2017, GPM distributed volumes it purchased from us to:

•

805 convenience stores controlled by GPM;

•

36 sites operated by independent dealers;

•

39 sites owned or leased by GPM and operated by lessee dealers; and

•

51 consignment locations where GPM sells motor fuel to retail customers.

Though we arrange for the transportation of motor fuel to GPM for sale to its controlled convenience stores and consignment locations, we do not physically transport any of the motor fuel. GPM directly arranges for transportation of motor fuel to its independent and lessee dealers.

In addition to the volumes of motor fuel we distribute to GPM, we also distribute motor fuel directly to nine sub-wholesalers and bulk purchasers. Sub-wholesalers, in turn, distribute fuel to convenience stores. Bulk purchasers primarily purchase motor fuel for their own use. For the three months ended March 31, 2017 and the year ended December 31, 2016, we distributed approximately 1.4 million and 6.3 million gallons of motor fuel to sub-wholesalers and bulk purchasers, respectively. GPM is obligated to provide us a right of first offer to purchase fuel distribution contracts for all convenience stores, dealer sites and consignment locations that GPM acquires in the future, as described below in “—Our Relationship with GPM Investments, LLC—Our Agreements with GPM.”

The total amount of motor fuel we sold grew from 284.7 million gallons during 2012 to over 667.0 million gallons during 2016, primarily as a result of a series of convenience store acquisitions by GPM. Since January 1, 2012, the number of GPM-controlled convenience stores has grown from 203 to 805, while the amount of motor fuel sold to such convenience stores has increased from 220.8 million gallons during 2012 to 597.1 million gallons during 2016.

LOGO

(1)	Twelve months ended March 31, 2017.

(2)	Estimated volume of motor fuel sold for the twelve months ending June 30, 2018. Please read “Cash Distribution Policy and Restrictions on Distributions—Significant Forecast Assumptions.”

During the three months ended March 31, 2017 and the year ended December 31, 2016, approximately 99.2% and 99.1%, respectively, of our fuel gallons sold were pursuant to the GPM Distribution Contracts. Under the GPM Distribution Contracts, we are the exclusive distributor of motor fuel purchased by GPM’s existing convenience stores, independent and lessee dealers and consignment locations for 10 years at cost plus a fixed fee of 4.5 cents per gallon, as described in more detail below in “—Our Relationship with GPM Investments, LLC—Our Agreements with GPM.”

We believe that we have limited direct exposure to fluctuating commodity prices because we charge GPM the cost of our fuel plus a fixed markup. GPM, in turn, passes these costs along to its retail customers at its controlled convenience stores and consignment locations and to the dealers it supplies.

For the three months ended March 31, 2017, we had gross profit of approximately $8.3 million, net income of approximately $6.5 million and Adjusted EBITDA of approximately $8.1 million. For the year ended December 31, 2016, we had gross profit of approximately $30.4 million, net income of approximately $24.6 million and Adjusted EBITDA of approximately $29.9 million. Sales to GPM pursuant to the GPM Distribution Contracts accounted for

approximately 97.9% of our gross profit for each of those periods. Please read “—Non-GAAP Financial Measures” for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our most directly comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”).

Our Relationship with GPM Investments, LLC

One of our primary strengths is our relationship with GPM, our predecessor for financial presentation purposes for periods prior to January 1, 2016. GPM, the seventh largest convenience store chain in the United States ranked by store count, controls 805 convenience stores and is the exclusive motor fuel supplier to an additional 132 dealer sites throughout 18 states in the Mid-Atlantic, Southeastern, Midwestern and Northeastern United States as of March 31, 2017. GPM entered the motor fuel retail and distribution business with its acquisition of 169 Fas Mart and Shore Stop sites in 2003. Arie Kotler, the founder, Chief Executive Officer and President of GPM and Chairman of the Board of Directors, Chief Executive Officer and President of our general partner, managed this initial acquisition and has also been responsible for GPM’s continued growth through the acquisitions detailed below. Since its formation in 2003, GPM has achieved significant growth through a series of 13 acquisitions of convenience stores and dealer sites that have been successfully integrated into GPM’s existing business. GPM’s significant distribution volumes, together with its industry relationships, led to its negotiation of a 10-year supply agreement with Valero Marketing and Supply (“Valero Marketing”) in 2012, which was amended and extended to March 31, 2026, for over two billion gallons of motor fuel, making GPM the third largest Valero distributor of motor fuels in the United States and the largest on the East Coast. Set forth below is a chart detailing recent acquisitions by GPM.


Acquisition	Date of Acquisition (1)	Number of Convenience Stores Acquired (2)		Gallons of Motor Fuel Sold at Acquisition (3) (in millions)
Virginia Acquisition	August 1, 2013		5		4.5
Southeast Acquisition (4)	August 6, 2013		258		181.4
Carolinas Acquisition	February 3, 2015		8		8.0
Road Ranger Acquisition	March 20, 2015		42		72.8
Midwest Acquisition (5)	June 3, 2015		126		114.5
GasMart Acquisition	February 23, 2016		15		7.4
Fuel USA Acquisition	March 8, 2016		42		50.2
JiffiStop Acquisition	October 6, 2016		17		23.9
Admiral Acquisition (6)	November 15, 2016		137		130.0
Roadrunner Acquisition	April 4, 2017		92		100.0

(1)	Final closing date of the multi-stage acquisition.

(2)	Excludes dealer locations.

(3)	Represents gallons of motor fuel sold during the twelve months prior to the date of the acquisition.

(4)	Excludes five convenience stores that do not sell motor fuel.

(5)	Excludes 35 convenience stores that do not sell motor fuel.

(6)	Excludes 33 tobacco stores.

We primarily engage in wholesale distribution of fuel to GPM. GPM operates its convenience store business and its consignment business and the substantial majority of its dealer business. GPM owns our general partner, which controls us, and, following this offering, will continue to own a significant economic interest in us through its direct and indirect ownership of (i) % of

our limited partner interests and (ii) all of our incentive distribution rights, which will entitle GPM to increasing percentages of the cash we distribute in excess of $ per unit per quarter.

Our Agreements with GPM

GPM Distribution Contracts

We have entered into multiple long-term, fee-based fuel distribution agreements with GPM, pursuant to which we distribute motor fuel to GPM-controlled convenience stores and dealer sites at cost, plus a fixed fee of 4.5 cents per gallon, for a period of 10 years from the date of the agreement. In connection with the closing of this offering, the GPM Distribution Contracts will be consolidated and amended and restated to be effective for a period of 10 years from the closing of this offering.

In connection with each of the above referenced acquisitions that GPM consummated subsequent to the Formation Date, we exercised our option to acquire the right to distribute fuel to the acquired sites and, where applicable, acquired the related existing fuel supply agreements. We paid a total of approximately $100.0 million in cash and equity consideration, including the issuance of approximately $16.9 million in Class AQ Units (as defined below) and approximately $72.5 million in Class B Preferred Units (as defined below), to acquire these fuel distribution rights.

Omnibus Agreement

Effective as of the Formation Date, we entered into an omnibus agreement with GPM, pursuant to which, among other things we received (i) a 10-year right of first offer from the Formation Date to purchase the right to distribute fuel to GPM for newly acquired convenience stores at a negotiated rate; and (ii) a 10-year right from the Formation Date to participate in transactions with GPM to acquire any distribution contracts and to negotiate the fuel supply terms for distributing fuel to GPM for any convenience stores, independent or lessee dealers, or consignment locations included in a potential acquisition under consideration by GPM, to the extent we are able to reach an agreement on terms. In addition, our omnibus agreement provides that we are obligated to distribute any volumes for stores that GPM acquires in the future, either at a negotiated rate pursuant to our right of first offer to purchase fuel distribution rights or the alternate fuel sales rate, as described further in “Certain Relationships and Related Transactions—Agreements with Affiliates in Connection with the Formation Transactions—Omnibus Agreement.” In connection with the closing of this offering, the omnibus agreement will be amended and restated to be effective for a period of 10 years from the closing of this offering.

For more information on our agreements with GPM and its subsidiaries, please read “Business—Our Agreements with GPM” and “Certain Relationships and Related Transactions—Agreements with Affiliates in Connection with the Formation Transactions.” For a discussion of risks that could adversely affect our expected long-term contractual cash flow stability, please read “Risk Factors—Risks Inherent in Our Business.”

Our Strengths and Strategies

Competitive Strengths

We believe we have the following competitive strengths:

•

Stable cash flows from long-term fee based wholesale motor fuel distribution contracts. We generate substantially all of our revenue from earning a fixed 4.5 cents per gallon fee on the

wholesale distribution of motor fuel to GPM pursuant to 10-year distribution contracts. We believe that our long-term contracts coupled with ongoing demand for motor fuel in the geographic areas in which we operate provide a stable source of cash flow.

•

Established history of acquiring sites and successfully integrating the associated operations. Our management has steadily grown GPM’s business by acquiring convenience store and wholesale motor fuel sites. Since GPM’s formation with its acquisition of 169 Fas Mart and Shore Stop sites in 2003, our senior management team has completed 13 acquisitions encompassing 844 retail and wholesale sites. Our strong industry relationships and proven ability to successfully complete complex acquisitions has enabled GPM to acquire assets on what it believes to be attractive terms. Furthermore, GPM has successfully integrated its acquisitions into its existing business by realizing economies of scale through increased purchasing power with refiners and other fuel suppliers. The convenience store industry is fragmented, which we believe presents acquisition opportunities for GPM and us. GPM continues to evaluate a number of acquisition opportunities.

•

Long-term relationships with major integrated oil companies and independent refiners. We have established long-term relationships and supply agreements with companies that are among the largest suppliers of branded motor fuel in North America. For the three months ended March 31, 2017 and the year ended December 31, 2016, approximately 93% and 92%, respectively, of our fuel purchases were branded. Currently, we believe that we are the third largest distributor of Valero-branded motor fuels in the U.S. and the largest on the East Coast. We also distribute BP, Conoco, Exxon, Marathon, Mobil, Phillips 66, Shell and Sunoco branded fuels. This diverse mix of major fuel suppliers helps to ensure sufficient fuel supply during market disruptions and to maintain competitive fuel costs.

•

Substantial industry experience. Our management team has extensive experience in the wholesale petroleum and convenience store industry. Chairman, Chief Executive Officer and President Arie Kotler founded GPM in 2003 and has approximately 14 years of industry experience. Chief Financial Officer Don Bassell has over 10 years of service with GPM and has over 30 years of industry experience. Chief Operating Officer Chris Giacobone has approximately 27 years of industry experience.

•

Geographically diverse operations. Since GPM’s formation with its acquisition of 169 Fas Mart and Shore Stop sites in Virginia, Maryland and Delaware, we have expanded into new geographic areas. Our wholesale motor fuels distribution now spans across 18 states: Connecticut, Delaware, Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Missouri, Nebraska, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee and Virginia. Our diverse footprint allows us to maintain more stable fuel volumes and fuel margins, compared with more regionally concentrated competition, which may be more materially affected by supply constraints, such as pipeline interruptions, or adverse weather events, such as hurricanes or blizzards.

Business Strategies

Our primary business objectives are to make stable quarterly cash distributions to our unitholders and, over time, to increase our quarterly cash distributions by continuing to execute the following strategies:

•

Expand through GPM acquisitions. We anticipate growing our business by either purchasing the right to provide wholesale motor fuel to convenience stores that may be

acquired by GPM or jointly consummating acquisitions with GPM, as well as by directly acquiring wholesale motor fuel businesses with existing dealer operations. Through GPM’s expansion, we plan to further develop our wholesale motor fuel distribution both within our existing area of operations and in new geographic areas. We believe GPM has considerable opportunity to serve as a consolidator in our industry. According to the Association for Convenience and Fuel Retailing (“NACS”), there were 123,807 convenience stores with retail fuel sales in the U.S. as of March 1, 2017. Over 70% of these sites were owned by entities with fewer than 50 total sites. As GPM continues to make acquisitions, we have the right, under the right of first offer contained in the omnibus agreement, to purchase distribution rights to any new locations GPM acquires in the future. If we are unable to come to terms regarding the purchase of those distribution rights, we will be obligated to distribute motor fuel to such sites at the alternate fuel sales rate.

•

Maintain strong relationships with major integrated oil companies and independent refiners. Our relationships with suppliers of branded motor fuels are crucial to the operation of our business. By leveraging our relationships with our suppliers, we have been able to negotiate supply agreements with what we believe to be competitive terms and intend to continue to maintain such relationships in the future.

•

Manage risk by outsourcing delivery of motor fuel, mitigating exposure to environmental liabilities and implementing systems and controls to manage operations. Motor transportation services are not part of our business, and we do not own or lease trucks for the delivery of motor fuel. Instead, we contract with third parties for the delivery of motor fuel. This strategy alleviates capital, labor and liability constraints associated with operating a transportation fleet.

•

Financial flexibility to pursue acquisitions and other expansion opportunities. Post-offering, we expect to have ample liquidity to pursue accretive acquisitions. After the application of the net proceeds we receive from this offering, we expect to have at least $ million available in cash and $ million of borrowing capacity available under our revolving credit facility for either acquisitions or working capital purposes. The credit agreement includes an accordion feature that allows the aggregate commitments under the revolving credit facility to be increased by an additional $110.0 million, subject to certain conditions. We believe that our strong balance sheet and ability to access the debt and equity capital markets will provide us with the financial flexibility to pursue accretive acquisition and expansion opportunities.

Risk Factors

An investment in our common units involves risks. You should carefully consider the risks described in “Risk Factors” and the other information in this prospectus before deciding whether to invest in our common units. If any of these risks were to occur, our financial condition, results of operations, cash flows and ability to make distributions to our unitholders would be adversely affected and you could lose all or part of your investment. For more information regarding the known material risks that could impact our business, please read “Risk Factors.”

Our Management

We are managed and operated by the board of directors and executive officers of our general partner, GPM Petroleum GP, LLC, a wholly owned subsidiary of GPM. Following this offering, GPM will own, directly or indirectly, approximately % of our outstanding common units, all of our subordinated units and all of our incentive distribution rights. As a result of owning our

general partner, GPM has the right to appoint all of the members of the board of directors of our general partner, with at least three of these directors meeting the independence standards established by the New York Stock Exchange (“NYSE”). After the completion of this offering, we expect that our general partner will have seven directors. We expect that two independent directors will be appointed to the board of directors of our general partner prior to the date our common units are listed for trading on the NYSE. Our unitholders will not be entitled to elect our general partner or its directors or otherwise directly participate in our management or operations. For more information about the executive officers and directors of our general partner, please read “Management.”

Following the consummation of this offering, under the terms of our omnibus agreement we will not be obligated to reimburse GPM for certain general and administrative expenses it would otherwise allocate to us until we generate an aggregate gross profit of at least $55 million for the prior four quarters. Thereafter, we will be obligated to reimburse GPM for general and administrative expenses through a set fee in an amount equal to 2% of our annual gross profit. The cap contained in the omnibus agreement does not apply to incremental general and administrative expenses we expect to incur as a result of becoming a publicly traded partnership. In addition, we will reimburse GPM for third-party costs incurred by GPM and its affiliates in providing general and administrative services. Neither our partnership agreement nor our omnibus agreement will otherwise limit the amount of expenses for which our general partner and its affiliates may be reimbursed. Our partnership agreement provides that our general partner will determine in good faith the expenses that are allocable to us. Please read “Certain Relationships and Related Transactions—Agreements with Affiliates in Connection with the Formation Transactions.”

Summary of Conflicts of Interest and Fiduciary Duties

While our relationship with GPM and its subsidiaries is a significant strength, it is also a source of potential conflicts. Our general partner has a legal duty to manage us in a manner beneficial to us and the holders of our common and subordinated units. However, the officers and directors of our general partner also have fiduciary duties to manage our general partner in a manner beneficial to its owner, GPM. Additionally, each of our executive officers and certain of our directors are also officers and directors of GPM. As a result, conflicts of interest may arise in the future between us and our unitholders, on the one hand, and GPM and our general partner, on the other hand. For example, our general partner is entitled to make determinations that would affect the amount of cash distributions we make to holders of common and subordinated units, which in turn has an effect on whether our general partner receives incentive cash distributions.

Delaware law provides that Delaware limited partnerships may, in their partnership agreements, restrict, eliminate or expand the fiduciary duties owed by the general partner to limited partners and the partnership. Our partnership agreement limits the liability of, and defines the fiduciary duties owed by, our general partner to our unitholders. Our partnership agreement also restricts the remedies available to our unitholders for actions that might constitute a breach of fiduciary duty by our general partner or its officers and directors had we not explicitly defined those duties in our partnership agreement. For example, our partnership agreement provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacity as general partner so long as it acted in good faith, meaning it believed that the decisions were not adverse to the interests of our partnership and, with respect to criminal conduct, did not act with knowledge that its conduct was unlawful. Our partnership agreement also provides that our general partner, and the officers and directors of our general partner, will not be liable for

monetary damages to us for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or those persons acted in bad faith, meaning that they believed that the decision was adverse to the partnership, or, in the case of a criminal matter, acted with knowledge that such person’s conduct was criminal. For more information, please read “Risk Factors—Risks Inherent in an Investment in Us—Our partnership agreement limits the liability and duties of our general partner and restricts the remedies available to us and our common unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.” By purchasing a common unit, the purchaser agrees to be bound by the terms of our partnership agreement, and each unitholder is treated as having consented to various actions and potential conflict of interest contemplated in the partnership agreement that might otherwise be considered a breach of fiduciary or other duties under applicable state law. These provisions of our partnership agreement do not waive or diminish your rights under federal securities laws.

For a more detailed description of the conflicts of interest and the fiduciary duties of our general partner, please read “Conflicts of Interest and Fiduciary Duties.” For a description of other relationships with our affiliates, please read “Certain Relationships and Related Transactions.”

Principal Executive Offices

Our principal executive offices are located at 8565 Magellan Parkway, Suite 400, Richmond, Virginia 23227. Our telephone number is (804) 887-1980. Our website will be located at www. .com. We intend to make our periodic reports and other information filed with or furnished to the Securities and Exchange Commission (“SEC”), pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), available, free of charge, through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus.

Formation Transactions and Partnership Structure

We are a Delaware limited partnership formed in March 2015 by GPM to own and operate the wholesale motor fuel distribution business that was historically conducted by GPM, our predecessor, prior to the Formation Transactions. We commenced operations on January 12, 2016.

On January 11, 2016, we entered into a Contribution Agreement with GPM, WOC Southeast Holding Corp., a wholly owned subsidiary of GPM (“WOCSE”), and other parties thereto, pursuant to which (i) GPM contributed to us 100% of the limited partner interest in us and 100% of the outstanding limited liability company interests of GPM Petroleum, LLC, a Delaware limited liability company (“GPM OpCo”), in exchange for 9,943,695 of our convertible Class B preferred units (“Class B Preferred Units”), and (ii) WOCSE contributed certain assets to us, in exchange for 2,141,305 Class B Preferred Units (the “Formation Transactions”). In connection with the Formation Transactions, we closed a $70 million private placement to the SteelPath Funds in exchange for 3,500,000 of our convertible Class A preferred units (“Class A Preferred Units”).

At the closing of the Formation Transactions, the following transactions occurred:

•

GPM contributed six owned convenience store properties to GPM OpCo that GPM OpCo leases to third parties;

•

GPM OpCo entered into exclusive distribution agreements for 10 years with GPM and its subsidiaries pursuant to which GPM and its subsidiaries purchase fuel from us at our cost plus a fixed margin of 4.5 cents per gallon;

•

GPM contributed substantially all of its wholesale motor fuel distribution business to GPM OpCo, including the fuel supply contracts with Valero and other suppliers;

•

GPM contributed to us all of the equity interests in GPM OpCo, and we assumed $7.7 million of GPM’s trade payables, $32.4 million under two term loans with PNC Bank, National Association, which were amended and restated into a single term loan (as amended and restated, the “PNC Term Loan”), and $24.0 million of certain affiliate loans;

•

We issued to our general partner a non-economic general partner interest in us, as well as all of our incentive distribution rights;

•

We issued an aggregate of 12,085,000 Class B Preferred Units to GPM and 3,500,000 Class A Preferred Units to the SteelPath Funds. Please read “—The Offering—Units outstanding after this offering”;

•

We entered into a $110.0 million revolving credit facility, which contains an accordion feature that, subject to certain conditions, provides for an increase of up to $110.0 million;

•

We utilized proceeds from the issuance of the Class A Preferred Units to purchase approximately $31.8 million of U.S. Treasury or other investment grade securities, which were assigned as collateral to secure 98% of the principal amount of the PNC Term Loan, for which a guarantee of collection was provided by GPM; and

•

We entered into the omnibus agreement with GPM, pursuant to which, among other things, we received a 10-year option to participate in acquisition opportunities with and from GPM, as described further in “Certain Relationships and Related Transactions—Agreements with Affiliates in Connection with the Transactions—Omnibus Agreement.”

In connection with the Fuel USA Acquisition, we issued 843,750 Class AQ units (“Class AQ Units”), with a value of approximately $16.9 million, to the seller (“Fuel USA”) in exchange for Fuel USA’s contribution to us of its rights to distribute fuel to the convenience stores acquired by GPM.

At the closing of this offering, the following transactions will occur:

•

GPM’s Class B Preferred Units will be converted into common units and subordinated units, representing an aggregate % limited partner interest in us;

•

the SteelPath Funds’ Class A Preferred Units will be converted into common units, representing an aggregate % limited partner interest in us;

•

Fuel USA’s Class AQ Units will be converted into common units, representing an aggregate % limited partner interest in us; and

•

We will issue to the public common units representing a % limited partner interest in us ( common units if the underwriters exercise their option to purchase additional common units in full), and we will use the net proceeds from this offering as described under “Use of Proceeds.”

Organizational Structure

The following is a simplified diagram of our ownership structure after giving effect to this offering.

LOGO


Public Common Units (3)		%
Interests of GPM:
Common Units (3)		%
Subordinated Units		%
General Partner Interest	0.0	%
Interests of SteelPath Funds and Other Investor (2):
Common Units		%

	100.0	%

(1)	Includes common units held by wholly-owned subsidiaries of GPM.

(2)	Includes common units held by the SteelPath Funds and common units held by Fuel USA.

(3)

common units will be issued to GPM or its wholly-owned subsidiaries, which includes common units issued to GPM or wholly-owned subsidiaries of GPM within 30 days of this offering, assuming the underwriters do not exercise their option to purchase additional common units. However, if the underwriters exercise their option in part or in full, the number of common units purchased by the underwriters pursuant to such exercise will be issued to the public and the remainder, if any, will be issued to GPM or a wholly owned subsidiary of GPM. Please read “—The Offering—Units outstanding after this offering.”

Emerging Growth Company

We are an “emerging growth company” as such term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as we are an emerging growth company, unlike public companies that are not emerging growth companies under the JOBS Act, we will not be required to:

•

provide an auditor’s attestation report on the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of Sarbanes-Oxley;

•

provide more than two years of audited financial statements and related management’s discussion and analysis of financial condition and results of operations in the registration statement of which this prospectus is a part;

•

comply with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”) requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;

•

provide certain disclosure regarding executive compensation required of larger public companies or hold stockholder advisory votes on executive compensation required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”); or

•

obtain stockholder approval of any golden parachute payments not previously approved.

We will cease to be an emerging growth company upon the earliest of:

•

the last day of the fiscal year in which we have $1.07 billion or more in annual revenues;

•

the date on which we become a “large accelerated filer” (the fiscal year-end on which the total market value of our common equity securities held by non-affiliates is $700 million or more as of June 30);

•

the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or

•

the last day of the fiscal year following the fifth anniversary of our initial public offering.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards, but we hereby irrevocably opt out of the extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for other public companies.

The Offering

Common units offered to the public

common units.

common units if the underwriters exercise their option to purchase up to additional common units in full.

Units outstanding after this offering

common units and subordinated units, for a total of limited partner units, regardless of whether or not the underwriters exercise their option to purchase additional common units. Of this amount, common units will be issued to GPM or a wholly owned subsidiary of GPM assuming the underwriters do not exercise their option to purchase additional common units. However, if the underwriters do exercise their option to purchase additional common units, we will (i) issue to the public the number of additional common units purchased by the underwriters pursuant to such exercise and (ii) issue to GPM or a wholly owned subsidiary of GPM, upon the expiration of the option exercise period, all remaining additional common units, if any. Any such additional common units issued to GPM or a wholly owned subsidiary of GPM will be issued for no additional consideration. Accordingly, the exercise of the underwriters’ option will not affect the total number of common units outstanding. In addition, our general partner will own a 0.0% non-economic general partner interest in us.

In addition, these unit numbers exclude common units reserved for issuance under our long-term incentive plan.

Use of proceeds

We intend to use the estimated net proceeds of approximately $ million from this offering, based upon the assumed initial public offering price of $ per common unit (the midpoint of the price range set forth on the cover page of this prospectus), after deducting underwriting discounts, the structuring fee of $ million paid to Raymond James and offering expenses:

•

to make a loan of $78.0 million to GPM in exchange for a 30-year note bearing interest at a fixed annual rate of 8%; and

•

to repay $13.5 million outstanding under our line of credit.

If the underwriters exercise their option to purchase additional common units in full, the additional net proceeds

would be approximately $ million (based upon the midpoint of the price range set forth on the cover page of this prospectus). The net proceeds received in connection with any exercise of such option will be used to fund a loan to GPM in exchange for a 30-year note bearing interest at a fixed annual rate of 8%.

Cash distributions

Within 45 days after the end of each quarter, beginning with the quarter ending , 2017, we expect to make a minimum quarterly distribution of $ per common unit and subordinated unit ($ per common unit and subordinated unit on an annualized basis) to unitholders of record on the applicable record date, to the extent we have sufficient cash after establishment of reserves and payment of fees and expenses, including payments to our general partner and its affiliates. Our ability to pay the minimum quarterly distribution is subject to various restrictions and other factors described in more detail under “Cash Distribution Policy and Restrictions on Distributions.”

For the first quarter that we are publicly traded, we will pay investors in this offering a prorated distribution covering the period from the completion of this offering through , 2017, based on the actual length of that period. Our partnership agreement generally provides that we will distribute cash each quarter during the subordination period in the following manner:

•

first, to the holders of common units, until each common unit has received the minimum quarterly distribution of $ plus any arrearages from prior quarters;

•

second, to the holders of subordinated units, until each subordinated unit has received the minimum quarterly distribution of $ ; and

•

third, to all unitholders, pro rata, until each unit has received a distribution of $ .

If cash distributions to our unitholders exceed $ per unit in any quarter, our unitholders and the holders of our incentive distribution rights will receive distributions according to the following percentage allocations:


		Marginal Percentage Interest in Distributions
Total Quarterly Distribution Target Amount		Unitholders			General Partner (as holder of IDRs)
above $	up to $		85.0	%		15.0	%
above $	up to $		75.0	%		25.0	%
above $			50.0	%		50.0	%

We refer to these distributions as “incentive distributions.” Please read “How We Make Distributions to Our Partners—Incentive Distribution Rights.”

The amount of cash available during the twelve months ended March 31, 2017 and the year ended December 31, 2016 would have been insufficient to support the full minimum quarterly distribution ($ per unit per quarter, or $ on an annualized basis) on all of our common units and subordinated units. Specifically, the amount of cash available that we generated during the twelve months ended March 31, 2017 and the year ended December 31, 2016 would have been sufficient to support a distribution of $ per common unit per quarter ($ per common unit on an annualized basis), or approximately % of the minimum quarterly distribution, and would have been sufficient to support distributions on % of our subordinated units for that period. Please read “Cash Distribution Policy and Restrictions on Distributions.”

We believe, based on our financial forecast and related assumptions included in “Cash Distribution Policy and Restrictions on Distributions,” that we will have sufficient cash available to pay the minimum quarterly distribution of $ on all of our common units and subordinated units for each quarter in the twelve months ending June 30, 2018; however, we do not have a legal or contractual obligation to pay quarterly distributions at our minimum quarterly distribution rate or at any other rate, and there is no guarantee that we will make quarterly cash distributions to our unitholders in any quarter. Please read “Cash Distribution Policy and Restrictions on Distributions.”

Subordinated units

GPM initially will own, directly or indirectly, all of our subordinated units. The principal difference between our common units and subordinated units is that in any quarter during the subordination period, holders of the subordinated units are not entitled to receive any distribution until the common units have received the minimum quarterly distribution plus any arrearages in the payment of the minimum quarterly distribution from prior quarters. Subordinated units will not accrue arrearages.

Conversion of subordinated units

The subordination period will end on the first business day after we have earned and paid at least (1) $ (the minimum quarterly distribution on an annualized basis) on each outstanding common and subordinated unit for each of three consecutive, non-overlapping four-quarter periods ending on or after , 2020 or (2) $ (150% of the

annualized minimum quarterly distribution) on each outstanding common and subordinated unit and the related distributions on the incentive distribution rights for any four-quarter period ending on or after , 2018, in each case provided there are no arrearages on our common units at that time.

When the subordination period ends, all subordinated units will convert into common units on a one-for-one basis, and thereafter no common units will be entitled to arrearages.

Our general partner’s right to reset the target distribution levels

Our general partner, as the holder of all of our incentive distribution rights, has the right, at any time when there are not subordinated units outstanding and it has received incentive distributions at the highest level to which it is entitled (50%) for each of the prior four consecutive whole fiscal quarters, to reset the initial target distribution levels at higher levels based on our cash distributions at the time of the exercise of the reset election. If our general partner transfers all or a portion of our incentive distribution rights in the future, then the holder or holders of a majority of our incentive distribution rights will be entitled to exercise this right. Following a reset election, the minimum quarterly distribution will be adjusted to equal the reset minimum quarterly distribution, and the target distribution levels will be reset to correspondingly higher levels based on the same percentage increase above the reset minimum quarterly distribution.

If our general partner elects to reset the target distribution levels, it will be entitled to receive a number of common units equal to the number of common units that would have entitled their holder to an aggregate quarterly cash distribution for the quarter prior to the reset election equal to the distributions to our general partner on the incentive distribution rights in such prior quarter. Please read “How We Make Distributions to Our Partners—Our General Partner’s Right to Reset Incentive Distribution Levels.”

Issuance of additional units

Our partnership agreement authorizes us to issue an unlimited number of additional units without the approval of our unitholders. Please read “Units Eligible for Future Sale” and “The Partnership Agreement—Issuance of Additional Partnership Interests.”

Limited voting rights

Our general partner will manage and operate us. Unlike the holders of common stock in a corporation, our unitholders will have only limited voting rights on matters affecting our business. Our unitholders will have no right to elect our

general partner or its directors on an annual or other continuing basis. Furthermore, our partnership agreement restricts our unitholders’ voting rights by providing that any units held by a person or group that owns 20% or more of any class of units then outstanding, other than our general partner and its affiliates, their transferees and persons who acquired such units with the prior approval of the board of directors of our general partner, cannot be voted on in any matter. Our general partner may not be removed except by a vote of the holders of at least 66²/₃% of the outstanding voting units, including any units owned by our general partner and its affiliates, voting together as a single class. Upon consummation of this offering, GPM will own an aggregate of % of our outstanding voting units (or % of our outstanding voting units, if the underwriters exercise their option to purchase additional common units in full). This will give GPM the ability to prevent the removal of our general partner. Please read “The Partnership Agreement—Voting Rights.”

Limited call right

If at any time our general partner and its affiliates own more than 80% of the outstanding common units, our general partner will have the right, but not the obligation, to purchase all of the remaining common units at a price equal to the greater of (1) the average of the daily closing price of the common units over the 20 trading days preceding the date three days before notice of exercise of the call right is first mailed and (2) the highest per-unit price paid by our general partner or any of its affiliates for common units during the 90-day period preceding the date such notice is first mailed. Please read “The Partnership Agreement—Limited Call Right.”

Estimated ratio of taxable income to distributions

We estimate that if you own the common units you purchase in this offering through the record date for distributions for the period ending , 2019, you will be allocated, on a cumulative basis, an amount of federal taxable income for that period that will be % or less of the cash distributed to you with respect to that period. For example, if you receive an annual distribution of $ per unit, we estimate that your average allocable federal taxable income per year will be no more than approximately $ per unit. Thereafter, the ratio of allocable taxable income to cash distributions to you could substantially increase. Please read “Material U.S. Federal Income Tax Consequences—Tax Consequences of Unit Ownership” for the basis of this estimate.

Material federal income tax consequences

For a discussion of the material federal income tax consequences that may be relevant to prospective unitholders who are individual citizens or residents of the United States, please read “Material U.S. Federal Income Tax Consequences.”

Directed unit program

At our request, the underwriters have reserved up to 5% of the common units being offered by this prospectus (excluding the common units that may be issued upon the underwriters’ exercise of their option to purchase additional common units) for sale to our directors, officers, employees and certain other persons associated with us at the initial public offering price set forth on the cover page of this prospectus. For further information regarding our directed unit program, please read “Underwriting—Directed Unit Program.”

Exchange listing

We intend to apply to list our common units on the NYSE under the symbol “GPMP.”

Summary Historical Financial and Operating Data

The following table shows summary historical financial and operating data of (i) GPM Investments, LLC, our predecessor for accounting purposes, for periods prior to January 1, 2016, and (ii) GPM Petroleum LP for any period subsequent to December 31, 2015. The summary historical financial data as of and for the year ended December 31, 2016 was derived from the audited historical consolidated financial statements of GPM Petroleum LP appearing elsewhere in this prospectus. The summary historical financial data of our predecessor as of and for the year ended December 31, 2015 are derived from the audited consolidated financial statements of our predecessor appearing elsewhere in this prospectus. The summary historical financial data of GPM Petroleum LP as of and for the three months ended March 31, 2017 and 2016 are derived from the unaudited condensed consolidated financial statements of GPM Petroleum LP appearing elsewhere in this prospectus.

Our predecessor’s results include the entire integrated operations of GPM, including convenience store merchandise revenue and retail fuel revenue. Following the completion of this offering, we will continue to engage in wholesale distribution of fuel to GPM and third parties and lease six convenience store properties to third parties. GPM will continue to operate its convenience store business with its associated merchandise and retail fuel revenue and will retain its consignment business and the substantial majority of its dealer business. For this reason, as well as the other factors described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Impacting the Comparability of Our Financial Results,” our results of operations are not comparable to our predecessor’s historical results of operations.

The following table should be read together with, and is qualified in its entirety by reference to, the historical financial statements and the accompanying notes appearing elsewhere in this prospectus. Among other things, the historical financial statements include more detailed information regarding the basis of presentation for the information in the following table. The table should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Use of Proceeds” and “—Our Relationship with GPM Investments, LLC.”

The following table presents a non-GAAP financial measure, Adjusted EBITDA, which we use in our business as an important supplemental measure of our performance and liquidity. Adjusted EBITDA represents net income before net interest expense, income taxes and depreciation and amortization, as further adjusted to exclude certain operating expenses that are reflected in our net income that we do not believe are indicative of our ongoing core operations, such as the gain or loss on disposal of assets. This measure is not calculated or presented in accordance with GAAP. We explain this measure under “—Non-GAAP Financial Measures” below and reconcile it to its most directly comparable financial measures calculated and presented in accordance with GAAP.


	GPM Petroleum LP									Predecessor
	Three Months Ended March 31,						Year Ended December 31, 2016			Year Ended December 31, 2015
	2017			2016			Year Ended December 31, 2016			Year Ended December 31, 2015
	(in thousands, except per gallon amounts)
Statement of Operations Data:
Revenues:
Fuel revenue—retail	$	—		$	—		$	—		$	1,155,777
Fuel revenue—wholesale		295,719			165,086			1,011,039			137,702
Merchandise revenue		—			—			—			645,328
Other revenue, net (1)		173			89			633			28,821

Total revenues		295,892			165,175			1,011,672			1,967,628
Gross profit:
Fuel gross profit—retail		—			—			—			98,950
Fuel gross profit—wholesale		8,114			5,865			29,774			6,829
Fuel gross profit—other		—			—			—			822
Merchandise gross profit		—			—			—			187,138
Other revenue, net (1)		173			89			633			28,821

Total gross profit		8,287			5,954			30,407			322,560
Operating expenses:
Store operating expense		—			—			—			243,399
Long–term incentive and equity compensation expense		—			—			—			—
General and administrative		151			132			461			31,014
Allocated general and administrative		388			355			1,498			—
Depreciation and amortization		806			278			2,349			20,010
Other expenses		—			—			—			3,730

Total operating expenses		1,345			765			4,308			298,153
Operating income		6,942			5,189			26,099			24,407
Interest expense, net		397			420			1,470			9,762

Net income before income taxes		6,545			4,769			24,629			14,645
Income tax expense		—			—			—			2,440

Net income	$	6,545		$	4,769		$	24,629		$	12,205
Other Financial Data:
Adjusted EBITDA (2)	$	8,136		$	5,822		$	29,946		$	48,677
Operating Data:
Fuel gallons sold:
Retail		—			—			—			500,546
Wholesale		181,393			131,488			667,085			67,552

Total fuel gallons sold		181,393			131,488			667,085			568,098

Fuel gross profit, cents per gallon
Retail		—	¢		—	¢		—	¢		19.8	¢
Wholesale		4.5			4.5			4.5			10.1
Fuel gross profit cents per gallon		4.5			4.5			4.5			18.6


	GPM Petroleum LP						Predecessor
	As of March 31,				As of December 31, 2016		As of December 31, 2015
	2017		2016		As of December 31, 2016		As of December 31, 2015
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	1,893	$	4,645	$	7,410	$	7,649
Property and equipment, net		2,588		2,664		2,607		152,679
Intangibles, net		25,185		20,987		25,973		7,192
Total assets		99,003		89,494		106,708		407,464
Current and long-term debt, net		44,214		37,330		44,079		89,157
Accrued expenses and other current liabilities		5,162		5,701		5,849		37,127
Total long-term liabilities		44,380		37,491		44,243		137,731
Total liabilities		80,640		68,285		87,265		326,267
Total partners’/members’ equity		18,363		21,209		19,443		81,197

(1)

Other revenue primarily represents revenues derived from providing products and services where GPM acted as an agent and did not take ownership of items sold. Revenue generating activities retained by GPM include primarily lottery net revenues, ATM services, money order services and phone cards while we and GPM each recognize rental income.

(2)	Adjusted EBITDA is defined in “—Non-GAAP Financial Measures” below.

Non-GAAP Financial Measures

We define Adjusted EBITDA as net income before net interest expense, income taxes, long-term incentive and equity compensation expense and depreciation and amortization, as further adjusted to exclude certain operating expenses that are reflected in our net income that we do not believe are indicative of our ongoing core operations, such as the gain or loss on disposal of assets. It also includes certain non-cash items.

We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because:

•

securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities;

•

it facilitates management’s ability to measure the operating performance of our business on a consistent basis by excluding the impact of items not directly resulting from our core operations; and

•

it is used by our management for internal planning purposes, including aspects of our consolidated operating budget and capital expenditures.

Adjusted EBITDA is not calculated or presented in accordance with GAAP and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:

•

it does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

•

it does not reflect changes in, or cash requirements for, working capital;

•

it does not reflect significant interest expense, or the cash requirements necessary to service interest or principal payments on our revolving credit facility and our term loan facility (together, the “credit facilities”);

•

it does not reflect payments made or future requirements for income taxes;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements; and

•

because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

The following table presents a reconciliation of net income to Adjusted EBITDA:


	GPM Petroleum LP						Predecessor
	Three Months Ended March 31,				Year Ended December 31, 2016		Year Ended December 31, 2015
	2017		2016		Year Ended December 31, 2016		Year Ended December 31, 2015
	(in thousands)
Net income	$	6,545	$	4,769	$	24,629	$	12,205
Interest expense, net		397		420		1,470		9,762
Tax expense		–		–		–		2,440
Depreciation and amortization		806		278		2,349		20,010
Allocated general and administrative expenses		388		355		1,498		–

EBITDA		8,136		5,822		29,946		44,417

Add:
Transaction costs		–		–		–		3,483
Asset impairment		–		–		–		374
Loss on disposal of assets		–		–		–		403

Adjusted EBITDA	$	8,136	$	5,822	$	29,946	$	48,677

The following table presents a reconciliation of net cash provided by operating activities to Adjusted EBITDA:


	GPM Petroleum LP									Predecessor
	Three Months Ended March 31,						Year Ended December 31, 2016			Year Ended December 31, 2015
	2017			2016			Year Ended December 31, 2016			Year Ended December 31, 2015
	(in thousands)
Net cash provided by (used in) operating activities	$	2,496		$	(759	)	$	25,424		$	43,933
Changes in operating assets and liabilities		5,380			6,292			3,585			(10,525	)
Non-cash adjustments		(137	)		(131	)		(533	)		(1,193	)
Tax expense		–			–			–			2,440
Interest expense, net		397			420			1,470			9,762

EBITDA		8,136			5,822			29,946			44,417

Add:
Transaction costs		–			–			–			3,483
Asset impairment		–			–			–			374
Loss on disposal of assets		–			–			–			403

Adjusted EBITDA	$	8,136		$	5,822		$	29,946		$	48,677

RISK FACTORS

Limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. You should carefully consider the following risk factors together with all of the other information included in this prospectus in evaluating an investment in our common units.

If any of the following risks were to occur, our business, financial condition, results of operations and cash available for distribution could be materially adversely affected. In that case, we might not be able to make distributions on our common units, the trading price of our common units could decline, and you could lose all or part of your investment in us.

Risks Inherent in Our Business

For the three months ended March 31, 2017 and the year ended December 31, 2016, GPM accounted for approximately 99.2% and 94.0% of our revenues, 97.7% and 93.8% of our gross profit and 99.2% and 99.1% of our fuel gallons sold, respectively. As we expect to continue to derive the substantial majority of our revenues from GPM for the foreseeable future, we are subject to the risk of nonpayment or nonperformance by GPM under the GPM Distribution Contracts. Furthermore, the GPM Distribution Contracts do not impose any minimum volume obligations on GPM. Please read “Certain Relationships and Related Transactions—Agreements with Affiliates in Connection with the Formation Transactions—GPM Distribution Contracts.” If GPM changes its business strategy or significantly reduces the volume of motor fuel it purchases for its convenience stores, for independent and lessee dealers or for consignment locations, our cash flows will be adversely impacted. Any event, whether in our areas of operation or otherwise, that materially and adversely affects GPM’s financial condition, results of operations or cash flows may adversely affect our ability to sustain or increase cash distributions to our unitholders. Accordingly, we are indirectly subject to the operational and business risks of GPM, some of which are related to the following:

•

competitive pressures from convenience stores, gasoline stations, and non-traditional fuel retailers such as supermarkets, club stores and mass merchants located in GPM’s markets;

•

volatility in prices for motor fuel, which could adversely impact consumer demand for motor fuel;

•

increasing consumer preferences for alternative motor fuels;

•

improvements in fuel efficiency;

•

seasonal trends associated with fuel sales in the convenience store industry, which significantly impact GPM’s fuel revenue;

•

the impact of severe or unfavorable weather conditions on GPM’s facilities, or on consumer behavior, travel and convenience store traffic patterns; and

•

GPM’s ability to acquire and successfully integrate new convenience stores.

Finally, we have no control over GPM, our largest source of revenue and our primary customer. GPM may elect to pursue a business strategy or make decisions that do not favor us and our business. Please read “—Risks Inherent in an Investment in Us—GPM owns and controls our general partner, which has sole responsibility for conducting our business and managing our operations. Our general partner and its affiliates, including GPM, have conflicts of interest with us and limited fiduciary duties to us and they may favor their own interests to the detriment of us and our unitholders.”

We are exposed to the credit risk of GPM, and any material non-payment or non-performance by GPM, including with respect to the GPM Distribution Contracts and our $78 million note from GPM, could reduce our ability to make distributions to our unitholders.

We are dependent on GPM for the majority of our revenues. In addition, we anticipate using a portion of the proceeds of this offering to make a loan to GPM. Consequently, we are subject to the risk of non-payment or non-performance by GPM, including with respect to the GPM Distribution Contracts and our $78 million note from GPM. Any such non-payment or non-performance could reduce our ability to make distributions to our unitholders.

Furthermore, GPM is subject to its own financial, operating and regulatory risks, which could increase the risk of default on its obligations to us. For example, as further described in Note 3 to our audited financial statements for the year ended December 31, 2015, in connection with the Midwest Acquisition, a former affiliate of WOC Southeast Holding Corp. (“WOC”), a wholly owned subsidiary of GPM Investments, has an obligation to make payments of approximately $290,000 per month until November 1, 2032, to a pension fund from which the former affiliate withdrew several years prior to the Midwest Acquisition. WOC has not received notice that the former affiliate made the April and May 2017 monthly payments and, in May 2017, the former affiliate filed in Delaware court for Chapter 11 relief under the U.S. Bankruptcy Code. If the former affiliate does not make the required monthly pension payments when due, the pension fund could accelerate the debt and the pension fund might require that WOC directly pay the remaining payment obligation, in whole or in part. Based on the terms of the Midwest purchase agreement, the balance of the consideration that was not yet paid to the Midwest Seller, that as of March 31, 2017 was approximately $20.6 million, can be fully offset against any payment if demanded from WOC in connection with the obligation to make payments to the pension fund. The amount and extent of any liability of WOC is uncertain.

Further, we will be subject to the risk of non-payment or late payment of the interest payments and principal of the note. Interest income on the note from GPM will be allocated in accordance with the general profit and loss allocation provisions included in our partnership agreement. Accordingly, any material non-payment or non-performance by GPM could reduce our ability to make distributions to our unitholders.

We may not have sufficient cash each quarter to pay the full amount of our minimum quarterly distribution of $ per unit, or $ per unit per year, which will require us to have cash available for distribution of approximately $ million per quarter, or $ million per year, based on (i) the number of common and subordinated units to be outstanding after the

completion of this offering and (ii) phantom units that we expect will be granted in connection with this offering. Please read “Executive Compensation—Long-Term Incentive Plan.” The amount of cash we can distribute on our common and subordinated units principally depends upon the amount of cash we generate from our operations, which will fluctuate from quarter to quarter based on a number of factors, some of which are beyond our control, including, among other things:

•

demand for motor fuel in the markets we serve, including seasonal fluctuations in demand for motor fuel;

•

competition from other companies that sell motor fuel products in our market areas;

•

regulatory action affecting the supply of or demand for motor fuel, our operations, our existing contracts or our operating costs;

•

prevailing economic conditions; and

•

volatility of prices for motor fuel.

In addition, the actual amount of cash we will have available for distribution will depend on other factors including:

•

the level and timing of capital expenditures we make;

•

the cost of acquisitions, if any;

•

our debt service requirements and other liabilities;

•

fluctuations in our working capital needs;

•

reimbursements made to our general partner and its affiliates for all direct and indirect expenses they incur on our behalf pursuant to the partnership agreement;

•

our ability to borrow funds and access capital markets;

•

restrictions contained in debt agreements to which we are a party; and

•

the amount of cash reserves established by our general partner.

You should be aware that we do not have a legal obligation to pay quarterly distributions at our minimum quarterly distribution rate or at any other rate. There is no guarantee that we will make quarterly cash distributions to our unitholders in any quarter. For a description of additional restrictions and factors that may affect our ability to pay cash distributions, please read “Cash Distribution Policy and Restrictions on Distributions.”

We would not have had a sufficient amount of cash available to pay the full minimum quarterly distribution on all of our common units and subordinated units for the twelve months ended March 31, 2017 and year ended December 31, 2016.

The amount of cash available during the twelve months ended March 31, 2017 and year ended December 31, 2016 would have been insufficient to support the full minimum quarterly

distribution ($ per unit per quarter, or $ on an annualized basis) on all of our common units and subordinated units. Specifically, the amount of cash available that we generated during the twelve months ended March 31, 2017 and year ended December 31, 2016 would have been sufficient to support a distribution of $ per common unit per quarter ($ per common unit on an annualized basis) and $ per common unit per quarter ($ per common unit on an annualized basis) on all of our common units, or approximately % and % of the minimum quarterly distribution on all of our common units, respectively, and would not have supported distributions on our subordinated units. For a calculation of our ability to make cash distributions to our unitholders based on our historical as adjusted results, please read “Cash Distribution Policy and Restrictions on Distributions.”

The assumptions underlying our forecast of cash available for distribution included in “Cash Distribution Policy and Restrictions on Distributions” are inherently uncertain and subject to significant business, economic, financial, regulatory and competitive risks and uncertainties that could cause cash available for distribution to differ materially from our estimates.

The forecast of cash available for distribution set forth in “Cash Distribution Policy and Restrictions on Distributions” includes our forecast of our results of operations and cash available for distribution for the twelve months ending June 30, 2018. Our ability to pay the full minimum quarterly distribution in the forecast period is based on a number of assumptions that may not come to fruition, including, but not limited to, the volume of motor fuel that we will sell pursuant to the GPM Distribution Contracts and to sub-wholesalers and bulk purchasers as well as the amount of rental income that we will receive for convenience store properties that we own and lease to third parties.

Our forecast of cash available for distribution has been prepared by management, and no independent registered public accountants have provided an opinion or report on such forecast. The assumptions underlying our forecast of cash available for distribution are inherently uncertain and are subject to significant business, economic, financial, regulatory and competitive risks and uncertainties that could cause cash available for distribution to differ materially from that which is forecasted. If we do not achieve our forecasted results, we may not be able to pay the minimum quarterly distribution or any amount on our common units or subordinated units, in which event the market price of our common units may decline materially. Please read “Cash Distribution Policy and Restrictions on Distributions.”

The growth of our wholesale business depends in part on GPM’s ability to acquire and profitably operate new convenience stores. If GPM does not acquire additional convenience stores, our growth strategy and ability to increase cash distributions to our unitholders may be adversely affected. Furthermore, GPM is not obligated to sell us wholesale distribution contracts associated with acquired convenience stores.

A significant part of our growth strategy is to increase our wholesale motor fuel distribution volumes and rental income relating to newly acquired convenience stores. GPM may not be able to acquire new convenience stores, and any new convenience stores that GPM acquires may be unprofitable or fail to attract expected volumes of fuel sales. Several factors that could affect GPM’s ability to acquire and profitably operate new convenience stores include:

•

competition in targeted market areas;

•

difficulties in adapting distribution and other operational and management systems to an expanded network of convenience stores;

•

the potential inability to obtain adequate financing to fund its expansion; and

•

difficulties in obtaining governmental and other third-party consents, permits and licenses needed to acquire and operate additional convenience stores.

There is no guarantee GPM will acquire additional convenience stores. If GPM were to determine in the future that growth via the acquisition of additional convenience stores is not attractive, or if we are unable to reach terms with GPM regarding the purchase of the right to distribute fuel to acquired convenience stores, it could adversely impact our ability to grow our motor fuel volumes and our ability to make distributions to our unitholders could be adversely affected.

The substantial majority of our revenues are generated under contracts that must be renegotiated or replaced. If we are unable to successfully renegotiate or replace these contracts, then our results of operations and financial condition could be adversely affected.

For the three months ended March 31, 2017 and the year ended December 31, 2016, GPM accounted for approximately 99.2% and 94.0% of our revenues, 97.7% and 93.8% of our gross profit and 99.2% and 99.1% of our fuel gallons sold, respectively. The GPM Distribution Contracts each have a term of 10 years with respect to sales of motor fuel to GPM who in turn will sell motor fuel to retail customers at its existing convenience stores and to independent and lessee dealers and at consignment locations. However, GPM is under no obligation to renew these volumes under the GPM Distribution Contracts on similar terms or at all, and GPM’s failure to renew the GPM Distribution Contracts would have a material adverse effect on our business, liquidity and results of operations. In addition, GPM’s obligation under the omnibus agreement to purchase from us any motor fuel it sells in the future for its own account will expire 10 years from the closing of this offering.

Also, we receive rental income from six convenience store properties that we own and lease to third parties. Our lessees have no obligation to renew their contracts. Our third-party rental contracts typically have an initial term of 10 years, and, as of March 31, 2017, had an average remaining life of three years.

We may be unable to renegotiate or replace our sub-wholesaler or bulk purchaser contracts or leases when they expire, and the terms of any renegotiated contracts may not be as favorable as the terms of the contracts they replace. Whether these contracts are successfully renegotiated or replaced is frequently subject to factors beyond our control. Such factors include fluctuations in motor fuel prices, counterparty ability to pay for or accept the contracted volumes and a competitive marketplace for the services offered by us. If we cannot successfully renegotiate or replace our sub-wholesaler or bulk purchaser contracts or must renegotiate or replace them on less favorable terms, revenues from these arrangements could decline and our ability to make distributions to our unitholders could be adversely affected.

Our financial condition and results of operations are influenced by changes in the prices of motor fuel, which may adversely impact our volumes, our customers’ financial condition and the availability of trade credit.

Our operating results are influenced by prices for motor fuel, pricing volatility and the market for such products. Crude oil and domestic wholesale motor fuel markets are volatile. General political conditions, acts of war or terrorism and instability in oil producing regions, particularly in the Middle East, Russia, Africa and South America, could significantly impact crude oil supplies and wholesale fuel costs. Significant increases and volatility in wholesale fuel costs could

result in significant increases in the retail price of motor fuel products and in lower sales to sub-wholesalers and bulk purchasers. When prices for motor fuel rise, some of our third-party customers may have insufficient credit to purchase motor fuel from us at their historical volumes. In addition, significant and persistent increases in the retail price of motor fuel could diminish consumer demand, which could subsequently diminish the volume of motor fuel we distribute. Furthermore, higher prices for motor fuel may reduce our access to trade credit or cause it to become more expensive.

A significant decrease in demand for motor fuel in the areas we serve would reduce our ability to make distributions to our unitholders.

A significant decrease in demand for motor fuel in the areas that we serve could significantly reduce our revenues and, therefore, reduce our ability to make or increase distributions to our unitholders. Our revenues are dependent on various trends, such as travel, tourism and employment rates in our areas of operation, and these trends can change. The U.S. Energy Information Administration projects transportation energy consumption in the U.S. will remain almost flat through 2050. Furthermore, seasonal fluctuations or regulatory action, including government imposed fuel efficiency standards, may affect demand for motor fuel. Because certain of our operating costs and expenses are fixed and do not vary with the volumes of motor fuel we distribute, our costs and expenses might not decrease ratably or at all should we experience a reduction in our volumes distributed. As a result, we may experience declines in our profit margin if our fuel distribution volumes decrease.

We currently depend on three principal suppliers for the majority of our gross purchases. A failure by a principal supplier to renew our supply agreement, a disruption in supply or an unexpected change in our supplier relationships could have a material adverse effect on our business.

For fiscal 2016, Valero Marketing supplied approximately 31%, Marathon Petroleum Company LP (“Marathon Petroleum”) supplied approximately 24% and BP Products North America Inc. (“BP North America”) supplied approximately 19% of our gross purchases, respectively. Our supply agreement with Valero Marketing expires in March 2026, our supply agreement with Marathon Petroleum expires in July 2018 and our supply agreement with BP North America expires in August 2026. If any of Valero Marketing, Marathon Petroleum or BP North America elects not to renew its contracts with us, we may be unable to replace the volume of motor fuel we currently purchase from it on similar terms or at all. We rely upon our suppliers to timely provide the volumes and types of motor fuels for which they contract with us. We purchase motor fuels from a variety of suppliers under term contracts. In times of extreme market demand or supply disruption, we may be unable to acquire enough fuel to satisfy the fuel demand of our customers. Any disruption in supply or a significant change in our relationship with our principal fuel suppliers could have a material adverse effect on our business, results of operations and cash available for distribution to our unitholders.

Increasing consumer preferences for alternative motor fuels, or improvements in fuel efficiency, could adversely impact our business.

Any technological advancements, regulatory changes or changes in consumer preferences causing a significant shift toward alternative motor fuels, or non-fuel dependent means of transportation, could reduce demand for conventional petroleum-based motor fuels. Additionally, a shift toward electric, hydrogen, natural gas or other alternative or non-fuel-powered vehicles could fundamentally change consumers’ spending habits or lead to new forms of fueling destinations or new competitive pressures. Finally, new technologies have been developed and governmental mandates have been implemented to improve fuel efficiency. Any of these outcomes

could result in decreased consumer demand for petroleum-based motor fuel, which could have a material adverse effect on our business, financial condition, results of operations and cash available for distribution to our unitholders.

The wholesale motor fuel distribution industry is characterized by intense competition and fragmentation and our failure to effectively compete could result in a material adverse effect on our business, results of operations and cash available for distribution to our unitholders.

The market for distribution of wholesale motor fuel is highly competitive and fragmented, which results in narrow margins. While major integrated oil companies have generally divested retail sites and the corresponding wholesale distribution to such sites, such major oil companies could shift from this strategy and decide to distribute their own products in direct competition with us, or large customers could attempt to buy directly from the major oil companies. The occurrence of any of these events could have a material adverse effect on our business, results of operations and cash available for distribution to our unitholders.

The motor fuel business is subject to seasonal trends, which may affect our earnings and ability to make distributions.

Our customers typically experience more demand for motor fuel during the late spring and summer months than during the fall and winter. Travel, recreational activities and construction have historically increased in these months in the geographic areas in which we operate, increasing the demand for motor fuel. Therefore, the volume of motor fuel that we distribute is typically somewhat higher in the second and third quarters of our fiscal year. As a result, our results from operations may vary from period to period, affecting our earnings and ability to make cash distributions.

Severe weather could adversely affect our business by damaging our suppliers or our customers’ facilities or communications networks.

Severe weather could damage our facilities or communications networks, or those of our suppliers or our customers, as well as interfere with our ability to distribute motor fuel to our customers, our customers’ ability to operate their locations and the demand for motor fuel at our customers’ locations. If warmer temperatures, or other climate changes, lead to changes in extreme weather events, including increased frequency, duration or severity, these weather-related risks could become more pronounced. Any weather-related catastrophe or disruption could have a material adverse effect on our business and results of operations, potentially causing losses beyond the limits of the insurance we currently carry.

Negative events or developments associated with our branded suppliers could have an adverse impact on our revenues.

We believe that the success of our operations is dependent, in part, on the continuing favorable reputation, market value and name recognition associated with the motor fuel brands sold both at GPM-controlled convenience stores and to independent and lessee dealers. An event which adversely affects the value of those brands could have an adverse impact on the volumes of motor fuel we distribute, which in turn could have a material adverse effect on our financial condition and ability to make distributions to our unitholders.

If we cannot otherwise agree with GPM on fuel supply terms for volumes we sell to GPM in the future, then we will be required to supply volumes at a price equal to our fuel cost plus the alternate fuel sales rate, which will be substantially less than the fixed fee of 4.5 cents per gallon we will receive for motor fuel sold pursuant to the GPM Distribution Contracts. Furthermore, if certain of our operating costs increase, we may not realize our anticipated profit margin with regard to motor fuel distributed to GPM at the alternate fuel sales rate.

Our omnibus agreement provides that if we cannot agree with GPM on the terms for purchasing the right to distribute fuel to GPM for GPM’s newly acquired sites not subject to the GPM Distribution Contracts, we are required to distribute motor fuel to GPM’s newly acquired convenience stores, independent or lessee dealers or consignment locations at a price equal to our fuel cost plus the alternate fuel sales rate, which will be substantially less than the fixed fee of 4.5 cents per gallon we receive for motor fuel sold pursuant to the GPM Distribution Contracts. The alternate fuel sales rate is a per gallon fee we will receive equal to our prior year per-gallon motor fuel distribution costs, excluding the cost of the motor fuel, plus 30% of such costs. Our motor fuel distribution costs include direct distribution expenses as well as general and administrative expenses, maintenance capital expenditures, applicable taxes and other miscellaneous costs. Under the omnibus agreement, the alternate fuel sales rate resets annually, but the fixed fee included in the rate for a given year will be based on our motor fuel distribution costs for the immediately preceding year. For a discussion of the alternate fuel sales rate, please read “Certain Relationships and Related Transactions—Agreements with Affiliates in Connection with the Formation Transactions—Omnibus Agreement.”

Accordingly, even though the alternate fuel sales rate resets annually, we may not realize our anticipated profit margin on motor fuel distributed to GPM at the alternate fuel sales rate. If our operating costs significantly increase in a given year as compared to immediately preceding year operating costs, the profit margin we receive for fuel distributed at the alternate fuel sales rate will be reduced, which will negatively impact our results of operations and cash available for distribution to our unitholders.

If we do not make acquisitions on economically acceptable terms, our future growth may be limited.

Our ability to grow depends substantially on our ability to make acquisitions that result in an increase in cash available for distribution per unit. We intend to expand our dealer distribution network through acquisitions from GPM and third parties, and we anticipate that we may jointly pursue mutually beneficial acquisition opportunities with GPM. However, we may be unable to take advantage of accretive opportunities for any of the following reasons:

•

we or GPM are unable to identify attractive acquisition opportunities or negotiate acceptable terms for acquisitions from third parties or GPM;

•

we are unable to reach an agreement with GPM regarding the terms of jointly pursued acquisitions;

•

we or GPM are unable to raise financing for such acquisitions on economically acceptable terms; or

•

we or GPM are outbid by competitors.

If we are unable to make acquisitions from GPM or third parties, or GPM is unable to make, or ceases making, acquisitions, our future growth and ability to increase distributions to our

unitholders will be limited. In addition, if we complete any future acquisitions, our capitalization and results of operations may change significantly. We may complete acquisitions which at the time of completion we believe will be accretive, but which ultimately may not be accretive. If any of these events were to occur, our future growth would be limited.

Any acquisitions we complete are subject to substantial risks that could reduce our ability to make distributions to unitholders.

Even if we do make acquisitions that we believe will increase cash available for distribution per unit, these acquisitions may nevertheless result in a decrease in cash available for distribution per unit. Any acquisition involves potential risks, including, among other things:

•

we may not be able to successfully integrate the businesses we acquire;

•

we may not be able to retain key locations from the acquired businesses;

•

we may fail or be unable to discover some of the liabilities of businesses that we acquire, including environmental liabilities or liabilities resulting from a prior owner’s noncompliance with applicable federal, state or local laws;

•

acquisitions may divert the attention of our senior management from focusing on our core business;

•

we may experience a decrease in our liquidity by using a significant portion of our cash available for distribution or borrowing capacity to finance acquisitions; and

•

we face the risk that our existing financial controls, information systems, management resources and human resources will need to grow to support future growth.

We depend on third-party transportation providers for the transportation of all of our motor fuel. Thus, a change of providers or a significant change in our relationship with these providers could have a material adverse effect on our business.

All of the motor fuel we distribute is transported from terminals to gas stations by third-party carriers pursuant to contractual agreements we entered into with respect to GPM-controlled convenience stores or consignment sites. GPM contracts for fuel delivered to sites operated by independent dealers and lessee dealers. Sub-wholesalers and bulk purchasers arrange for their own transportation. These contractual agreements often include provisions that permit us and GPM or the other third parties to suspend, reduce or terminate its obligations under each agreement if certain events occur. These events include force majeure events that prevent the counter-party from performing some or all of the required services under the applicable agreement. We and GPM and the other third parties have the discretion to make such decisions regarding its continued contractual obligations notwithstanding the fact that those decisions may significantly and adversely affect us. A change in transportation provider, a disruption or cessation in service or a significant change in our relationship with these transportation carriers could have a material adverse effect on our business, results of operations and cash available for distribution to our unitholders.

The distribution and storage of motor fuels is subject to environmental protection and operational safety laws and regulations that may expose us and GPM or our other customers to significant costs and liabilities, which could have a material adverse effect on our business.

Our business involves the purchase of motor fuels for wholesale distribution to customers, including GPM and third-party sub-wholesalers and bulk purchasers. GPM’s share of the motor

fuels is distributed to GPM-controlled convenience stores, independent and lessee dealers and consignment locations, whereas the third-party sub-wholesalers’ share is generally distributed to convenience stores and the bulk purchasers’ share is generally retained for their own use. We do not physically transport any of the motor fuels. Rather, third-party transporters distribute the motor fuels.

The transportation of motor fuels by third-party transporters as well as the associated storage of such fuels at locations including convenience stores are subject to various federal, state and local environmental laws and regulations, including those relating to ownership and operation of underground storage tanks, the release or discharge of regulated materials into the air, water and soil, the generation, storage, handling, use, transportation and disposal of hazardous materials, the exposure of persons to regulated materials, and the health and safety of employees dedicated to these transportation and storage activities. These laws and regulations may impose numerous obligations that are applicable to motor fuels transportation and storage and other related activities, including acquisition of, or applications for, permits, licenses, or other approvals before conducting regulated activities; restrictions on the quality and labeling of the motor fuels that may be sold; restrictions on the types, quantities and concentration of materials that may be released into the environment; requiring capital expenditures to comply with pollution control requirements; and imposition of substantial liabilities for pollution or non-compliance resulting from these activities. Numerous governmental authorities, such as the U.S. Environmental Protection Agency (the “EPA”), and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits, licenses and approvals issued under them, which can often require difficult and costly actions. Failure to comply with these existing laws and regulations or any newly adopted laws or regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties or other sanctions, the imposition of investigative, remedial or corrective action obligations and the issuance of orders enjoining future operations in particular areas or imposing additional compliance requirements on such operations. Moreover, the trend in environmental regulation is for more restrictions and limitations on activities that may adversely affect the environment, the occurrence of which may result in increased costs of compliance.

Where releases of motor fuels or other substances or wastes have occurred, federal and state laws and regulations require that contamination caused by such releases be assessed and remediated to meet applicable clean-up standards. Certain environmental laws impose strict, joint and several liability for costs required to clean-up and restore sites where motor fuels or other waste products have been disposed or otherwise released. The costs associated with the investigation and remediation of contamination, as well as any associated third-party claims for damages or to impose corrective action obligations, could be substantial and could have a material adverse effect on us, GPM or our other customers who transport motor fuels or own or operate convenience stores or other facilities where motor fuels are stored. Moreover, as the owner of six convenience stores leased by third parties, we could also be held liable for the costs and other liabilities of clean-up and restoration of contamination as well as possible third-party claims at those locations, which could have a material adverse effect on us. Additionally, because GPM is our largest customer, we are indirectly subject to the business risks of GPM. While we have no plans to transport or store the motor fuels, if we were ever to conduct activities that resulted in our being legally characterized as a transporter or storer of motor fuels, or if we were ever held under applicable law to have negligently entrusted these transporter or any storage duties to a third party, then we, too, could be subject to some or all of these costs and liabilities, which could have a material adverse effect on our business and results of operations.

For more information on potential risks arising from environmental and occupational safety and health laws and regulations, please see “Business—Environmental and Occupational Safety and Health Matters.”

We are subject to federal, state and local laws and regulations that govern the product quality specifications of the refined petroleum products we purchase, store, transport and sell to our distribution customers.

Various federal, state and local government agencies have the authority to prescribe specific product quality specifications for certain commodities, including refined petroleum products that we distribute. Changes in product quality specifications, such as reduced sulfur content in motor fuels, or other more stringent requirements for motor fuels, could reduce our ability to procure product, require us to incur additional handling costs and require the expenditure of capital. If we are unable to procure product or recover these costs through increased sales, we may not be able to meet our financial obligations. Failure to provide motor fuel satisfying product quality specifications or otherwise to comply with these regulations could result in substantial penalties.

We are not fully insured against all risks incident to our business.

We are not fully insured against all risks incident to our business. We may be unable to obtain or maintain insurance with the coverage that we desire at reasonable rates. As a result of market conditions, the premiums and deductibles for certain of our insurance policies have increased and could continue to do so. Certain insurance coverage could become unavailable or available only for reduced amounts of coverage. For example, if we were to become subject to various litigation claims in the future, including dealer litigation and industry-wide or class-action claims, our defense costs and any resulting awards or settlement amounts may not be fully covered by our insurance policies. If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our financial condition and ability to make distributions to our unitholders.

We rely on our suppliers to provide trade credit terms to adequately fund our ongoing operations.

Our business is impacted by the availability of trade credit to fund fuel purchases. An actual or perceived downgrade in our liquidity or operations (including any credit rating downgrade by a rating agency) could cause our suppliers to seek credit support in the form of additional collateral, limit the extension of trade credit, or otherwise materially modify their payment terms. Any material changes in our payments terms or availability of trade credit provided by our principal suppliers could impact our liquidity, results of operations and cash available for distribution to our unitholders.

Because we depend on our senior management’s experience and knowledge of our industry, we could be adversely affected were we to lose key members of our senior management team.

We are dependent on the expertise and continued efforts of our senior management team. If, for any reason, our senior executives do not continue to be active in our management, our business, financial condition or results of operations could be adversely affected. In addition, we do not maintain key man life insurance on our senior executives and other key employees.

Terrorist attacks and threatened or actual war may adversely affect our business.

Our business is affected by general economic conditions and fluctuations in consumer confidence and spending, which can decline as a result of numerous factors outside of our control. Terrorist attacks or threats, whether within the United States or abroad, rumors or threats of war, actual conflicts involving the United States or its allies, or military or trade disruptions impacting our suppliers or our customers may adversely impact our operations. Specifically, strategic targets

such as energy related assets (which could include refineries that produce the motor fuel we purchase or ports in which crude oil is delivered) may be at greater risk of future terrorist attacks than other targets in the United States. These occurrences could have an adverse impact on energy prices, including prices for motor fuels, and an adverse impact on our operations. Any or a combination of these occurrences could have a material adverse effect on our business, results of operations and cash available for distribution to our unitholders.

A cyber incident could result in information theft, data corruption, operational disruption and/or financial loss.

Our business has become increasingly dependent on digital technologies to conduct day-to-day operations. Our business associates, including customers and suppliers, are also dependent on digital technology. As dependence on digital technologies has increased, cyber incidents, including deliberate attacks or unintentional events, have also increased. Our technologies, systems, networks, and those of our business associates, may become the target of cyber attacks or information security breaches, which could lead to disruptions in critical systems, unauthorized release of confidential or protected information, corruption of data or other disruptions of our business operations. These events could damage our reputation and lead to financial losses from remedial actions, loss of business or potential liability, which could have a material adverse effect on our financial condition, results of operations or cash flows. Moreover, a security breach could require that we expend significant additional resources to upgrade further the security measures that we employ to guard against cyber attacks.

Our future debt levels may impair our financial condition.

After giving effect to this offering and the related transactions, we will have approximately $ of debt outstanding. Following the completion of this offering, we will have the ability to incur additional debt, including under our revolving credit facility. The level of our future indebtedness could have important consequences to us, including:

•

making it more difficult for us to satisfy our obligations with respect to our credit agreement governing our credit facilities;

•

limiting our ability to borrow additional amounts to fund working capital, capital expenditures, acquisitions, debt service requirements, the execution of our growth strategy and other activities;

•

requiring us to dedicate a substantial portion of our cash flow from operations to pay interest on our debt, which would reduce our cash flow available to fund working capital, capital expenditures, acquisitions, execution of our growth strategy and other activities;

•

making us more vulnerable to adverse changes in general economic conditions, our industry and government regulations and in our business by limiting our flexibility in planning for, and making it more difficult for us to react quickly to, changing conditions; and

•

placing us at a competitive disadvantage compared with our competitors that have less debt.

In addition, we may not be able to generate sufficient cash flow from our operations to repay our indebtedness when it becomes due and to meet our other cash needs. Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. In addition, our ability to service our debt will

depend on market interest rates, since we anticipate that the interest rates applicable to our borrowings will fluctuate. If we are not able to pay our debts as they become due, we will be required to pursue one or more alternative strategies, such as selling assets, refinancing or restructuring our indebtedness or selling additional debt or equity securities. We may not be able to refinance our debt or sell additional debt or equity securities or our assets on favorable terms, if at all, and if we must sell our assets, it may negatively affect our ability to generate revenues.

Our credit facilities have substantial restrictions and financial covenants that may restrict our business and financing activities and our ability to pay distributions to our unitholders.

We will be dependent upon the earnings and cash flow generated by our operations in order to meet our debt service obligations and to allow us to make cash distributions to our unitholders. The operating and financial restrictions and covenants in our credit facilities and any future financing agreements may restrict our ability to finance future operations or capital needs, to engage in or expand our business activities or to pay distributions to our unitholders. For example, our credit facilities restrict our ability to, among other things:

•

incur additional debt or issue guarantees;

•

incur or permit liens to exist on certain property;

•

make certain investments, acquisitions or other restricted payments;

•

modify or terminate certain material contracts; and

•

merge or dispose of all or substantially all of our assets.

In addition, the credit agreements governing our credit facilities contain covenants requiring us to maintain certain financial ratios. Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Credit Facilities” for additional information about our credit facilities.

Our future ability to comply with these restrictions and covenants is uncertain and will be affected by the levels of cash flow from our operations and other events or circumstances beyond our control. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we violate any provisions of our credit facilities that are not cured or waived within the appropriate time periods provided in our credit facilities, a significant portion of our indebtedness may become immediately due and payable, our ability to make distributions to our unitholders will be inhibited and our lenders’ commitment to make further loans to us may terminate. We might not have, or be able to obtain, sufficient funds to make these accelerated payments.

If we were unable to repay the accelerated amounts, our lenders could proceed against the collateral granted to them to secure such debt. If the payment of our debt is accelerated, our assets may be insufficient to repay such debt in full, which could result in our insolvency. In the event of our insolvency, the holders of our units could experience a partial or total loss of their investment.

The enactment and implementation of derivatives legislation, and the promulgation of regulations pursuant thereto, could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity-price, interest-rate, and other risks associated with our business and increase the working capital requirement to conduct these hedging activities.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), enacted on July 21, 2010, established federal oversight and regulation of the over-the-counter

derivatives market and entities, such as us, that participate in that market. The Dodd-Frank Act requires the Commodities Futures Trading Commission (the “CFTC”) and the SEC to promulgate rules and regulations implementing the Dodd-Frank Act. Although the CFTC has finalized certain regulations, others remain to be finalized or implemented, and it is not possible at this time to predict when this will be accomplished.

In October 2011, the CFTC issued regulations to set position limits for certain futures and option contracts in the major energy markets. The initial position limit rule was vacated by the United States District Court for the District of Columbia in September 2012. However, in November 2013, the CFTC proposed new rules that would place limits on positions in certain core futures and equivalent swaps contracts for, or linked to, certain physical commodities, subject to exceptions for certain bona fide hedging transactions. The rules were re-proposed in December 2016. As these new position limit rules are not yet final, the impact of those provisions on us is uncertain at this time.

The CFTC has designated certain interest-rate swaps and credit-default swaps for mandatory clearing, and the associated rules require us, in connection with derivative activities, to comply with clearing and trade-execution requirements or take steps to qualify for an exemption to such requirements. Although we qualify for the end-user exception from the mandatory clearing requirements for swaps entered to hedge our commercial risks, the application of the mandatory clearing and trade-execution requirements to other market participants, such as swap dealers, may change the cost and availability of the swaps that we use for hedging. In addition, for uncleared swaps, the CFTC or federal banking regulators may require end-users to enter into credit support documentation and/or post initial and variation margin in the future, although current rules do not result in requirements for our swap dealer counterparties to collect margin from us for our hedging transactions. Posting of collateral could impact liquidity and reduce cash available to us for capital expenditures, therefore reducing our ability to enter into derivatives to reduce risk and protect cash flows.

Finally, the Dodd-Frank Act was intended, in part, to reduce the volatility of oil and gas prices, which some legislators attributed to speculative trading in derivatives and commodity instruments related to oil and gas. Our revenues could be adversely affected if a consequence of the Dodd-Frank Act and implementing regulations is to lower commodity prices.

The full impact of the Dodd-Frank Act and related regulatory requirements upon our business will not be known until all of the regulations are implemented and the market for derivatives contracts has adjusted. The Dodd-Frank Act and any new regulations could significantly increase the cost of derivative contracts, materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against risks we encounter, and reduce our ability to monetize or restructure our existing derivative contracts. If we reduce our use of derivatives as a result of the Dodd-Frank Act and regulations implementing the Dodd-Frank Act, our results of operations may become more volatile and our cash flows may be less predictable, which could adversely affect our ability to plan for and fund capital expenditures.

Aside from derivatives legislation in the United States, the European Union and other non-U.S. jurisdictions are implementing regulations with respect to the derivatives market. To the extent we transact with counterparties in foreign jurisdictions, we may become subject to such regulations. At this time, the impact of such regulations is not clear.

Any of these consequences could have a material adverse effect on our financial condition and our ability to make cash distributions to our unitholders.

Changes in accounting standards, policies, estimates or procedures may impact our reported financial condition or results of operations.

The accounting standard setters, including the Financial Accounting Standards Board, the SEC and other regulatory bodies, periodically change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be difficult to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements. In addition, the preparation of consolidated financial statements in conformity with GAAP requires management to make significant estimates that affect the financial statements. Due to the inherent nature of these estimates, no assurance can be given that we will not be required to recognize significant, unexpected losses due to actual results varying materially from management’s estimates. Additional information regarding our critical accounting policies can be found in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies.”

Risks Inherent in an Investment in Us

Following this offering, GPM will own a % limited partner interest in us and will continue to own and control our general partner and continue to appoint all of the officers and directors of our general partner. Certain of the officers and directors of our general partner are also officers and/or directors of GPM. Although our general partner has a fiduciary duty to manage us in a manner beneficial to us and our unitholders, the executive officers and directors of our general partner have a fiduciary duty to manage our general partner in a manner beneficial to GPM. Therefore, conflicts of interest may arise between GPM and its affiliates, including our general partner, on the one hand, and us and our unitholders, on the other hand. In resolving these conflicts of interest, our general partner may favor its own interests and the interests of its affiliates over the interests of our common unitholders. These conflicts include the following situations, among others:

•

Neither our partnership agreement nor any other agreement requires GPM to pursue a business strategy that favors us. The affiliates of our general partner have fiduciary duties to make decisions in their own best interests and in the best interest of their owners, which may be contrary to our interests. In addition, our general partner is allowed to take into account the interests of parties other than us or our unitholders, such as GPM, in resolving conflicts of interest, which has the effect of limiting its fiduciary duty to our unitholders.

•

Certain of the officers and directors of our general partner are also officers and/or directors of GPM and owe fiduciary duties to GPM. The officers of our general partner also devote significant time to the business of GPM and are compensated by GPM accordingly.

•

Other than as provided in the omnibus agreement, GPM is not limited in its ability to compete with us and may offer business opportunities or sell assets to parties other than us.

•

The limited partner interests that GPM owns permit it to effectively control any vote of our limited partners. GPM is entitled to vote its units in accordance with its own interests, which may be contrary to the interests of our other unitholders.

•

Our partnership agreement limits the liability of, and reduces the fiduciary duties owed by, our general partner and also restricts the remedies available to unitholders for actions that, without the limitations, might constitute breaches of fiduciary duty. As a result of purchasing common units, unitholders consent to some actions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under applicable state law. These provisions of our partnership agreement do not waive or diminish unitholders’ rights under federal securities laws.

•

Except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval.

•

Our general partner determines the amount and timing of asset purchases and sales, borrowings, repayment of indebtedness and issuances of additional partnership securities and the level of reserves, each of which can affect the amount of cash that is distributed to our unitholders.

•

Our general partner determines the amount and timing of any capital expenditure and whether a capital expenditure is classified as a maintenance capital expenditure or an expansion capital expenditure. Please read “How We Make Distributions to Our Partners—Capital Expenditures.” These determinations can affect the amount of cash that is distributed to our unitholders which, in turn, affects the ability of the subordinated units to convert to common units. Please read “How We Make Distributions to Our Partners—Subordination Period.”

•

Our general partner may cause us to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make a distribution on the subordinated units, to make incentive distributions or to accelerate the expiration of the subordination period.

•

Our partnership agreement permits us to distribute up to $ million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. This cash may be used to fund distributions on our subordinated units or the incentive distribution rights.

•

Our general partner determines which costs incurred by it and its affiliates are reimbursable by us.

•

Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with its affiliates on our behalf. There is no limitation on the amounts our general partner can cause us to pay it or its affiliates.

•

Our general partner intends to limit its liability regarding our contractual and other obligations.

•

Our general partner may exercise its right to call and purchase common units if it and its affiliates own more than 80% of the common units.

•

Our general partner controls the enforcement of obligations owed to us by it and its affiliates. In addition, our general partner may decide whether to retain separate counsel or others to perform services for us.

•

Our general partner may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our general partner’s incentive distribution rights without the approval of the conflicts committee of the board of directors of our general partner or our unitholders. This election may result in lower distributions to our common unitholders in certain situations.

GPM may elect to pursue a business strategy or make decisions that do not favor us and our business. For example, under the GPM Distribution Contracts, GPM has agreed to reimburse us for certain state tax payments we make. Such provisions with respect to reimbursements of payments of taxes due to gallons distributed in Delaware may be unenforceable under Section 2110 of Title 30 of the Delaware Code and therefore our remedies may be limited.

Our general partner intends to limit its liability regarding our obligations.

Our general partner intends to limit its liability under contractual arrangements so that the counterparties to such arrangements have recourse only against our assets, and not against our general partner or its assets. Our general partner may therefore cause us to incur indebtedness or other obligations that are nonrecourse to our general partner. Our partnership agreement provides that any action taken by our general partner to limit its liability is not a breach of our general partner’s fiduciary duties, even if we could have obtained more favorable terms without the limitation on liability. In addition, we are obligated to reimburse or indemnify our general partner to the extent that it incurs obligations on our behalf. Any such reimbursement or indemnification payments would reduce the amount of cash otherwise available for distribution to our unitholders.

We expect to distribute a significant portion of our cash available for distribution to our partners, which could limit our ability to grow and make acquisitions.

We plan to distribute a significant portion of our cash available for distribution, which may cause our growth to proceed at a slower pace than that of businesses that reinvest their cash to expand ongoing operations. Our partnership agreement does not quantify how much of our cash available for distribution will, in fact, be distributed. Rather, that determination is left to the discretion of the board of directors of our general partner, after taking into account our current and future cash operating requirements and the long-term viability of the amount of our declared distributions. Nevertheless, we anticipate the board of directors of our general partner will distribute a significant portion of our cash available for distribution which could impact the pace of our growth in the absence of such a decision. See “Cash Distribution Policy and Restrictions on Distributions.”

To the extent we issue additional units, including in connection with any acquisitions or expansion capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level. There are no limitations in our partnership agreement on our ability to issue additional units, including units ranking senior to the common units. The incurrence of additional commercial borrowings or other debt to finance our growth strategy would result in increased interest expense, which, in turn, may impact the cash that we have available to distribute to our unitholders.

The board of directors of our general partner may modify or revoke our cash distribution policy at any time at its discretion. Our partnership agreement does not require us to pay any distributions at all.

The board of directors of our general partner will adopt a cash distribution policy pursuant to which we intend to distribute quarterly an amount at least equal to the minimum quarterly

distribution of $ per unit on all of our units to the extent we have sufficient cash from our operations after the establishment of reserves and the payment of our expenses. However, the board may change such policy at any time at its discretion, without unitholder approval, and could elect not to pay distributions for one or more quarters. See “Cash Distribution Policy and Restrictions on Distributions.”

In addition, our partnership agreement does not require us to pay any distributions at all. Accordingly, investors are cautioned not to place undue reliance on the permanence of such a policy in making an investment decision. Any modification or revocation of our cash distribution policy could substantially reduce or eliminate the amounts of distributions to our unitholders. The amount of distributions we make, if any, and the decision to make any distribution at all will be determined by the board of directors of our general partner, whose interests may differ from those of our common unitholders. Our general partner has limited duties to our unitholders, which may permit it to favor its own interests to the detriment of our common unitholders.

Our partnership agreement limits the liability and duties of our general partner and restricts the remedies available to us and our common unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.

Our partnership agreement limits the liability and duties of our general partner, while also restricting the remedies available to our common unitholders for actions that, without these limitations, might constitute breaches of fiduciary duty. Delaware partnership law permits such contractual reductions of fiduciary duty. By purchasing common units, common unitholders consent to be bound by the partnership agreement, and pursuant to our partnership agreement, each holder of common units consents to various actions and conflicts of interest contemplated in our partnership agreement that might otherwise constitute a breach of fiduciary or other duties under Delaware law. Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be held by state fiduciary duty law. For example:

•

Our partnership agreement permits our general partner to make a number of decisions in its individual capacity, as opposed to its capacity as general partner. This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, our common unitholders. Decisions made by our general partner in its individual capacity will be made by GPM, as the owner of our general partner, and not by the board of directors of our general partner. Examples of these decisions include:

•

whether to exercise its limited call right;

•

how to exercise its voting rights with respect to any units it may own;

•

whether to exercise its registration rights; and

•

whether or not to consent to any merger or consolidation or amendment to our partnership agreement.

•

Our partnership agreement provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacity as general partner so long as it acted in good faith, meaning it believed that the decisions were not adverse to the interests of our partnership and, with respect to criminal conduct, did not act with the knowledge that its conduct was unlawful.

•

Our partnership agreement provides that our general partner and the officers and directors of our general partner will not be liable for monetary damages to us for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or those persons acted in bad faith, meaning that they believed that the decision was adverse to the interest of the partnership, or, in the case of a criminal matter, acted with knowledge that such person’s conduct was criminal.

•

Our partnership agreement provides that our general partner will not be in breach of its obligations under the partnership agreement or its duties to us or our limited partners with respect to any transaction involving an affiliate if:

•

the transaction with an affiliate or the resolution of a conflict of interest is:

•

approved by the conflicts committee of the board of directors of our general partner, although our general partner is not obligated to seek such approval; or

•

approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner and its affiliates; or

•

the board of directors of our general partner acted in good faith, meaning that they believed that the decision was not adverse to the interest of the partnership, in taking any action or failing to act.

•

Our partnership agreement provides that the conflicts committee of the board of directors of our general partner may be comprised of one or more independent directors. If our general partner establishes a conflicts committee with only one independent director, the interests of our unitholders may not be as well served as if the conflicts committee were comprised of at least two independent directors. A single-member conflicts committee would not have the benefit of discussion with, and input from, other independent directors.

If an affiliate transaction or the resolution of a conflict of interest is not approved by our common unitholders or the conflicts committee then it will be presumed that, in making its decision, taking any action or failing to act, the board of directors acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. Please read “Conflicts of Interest and Fiduciary Duties.”

By purchasing a common unit, a unitholder will become bound by the provisions of our partnership agreement, including the provisions described above. See “Description of the Common Units—Transfer of Common Units.” Other than as provided in the omnibus agreement, GPM is not limited in its ability to compete with us and may offer business opportunities or sell assets to parties other than us.

Our general partner has the right, at any time when there are no subordinated units outstanding and it has received incentive distributions at the highest level to which it is entitled (50%) for each of the prior four consecutive whole fiscal quarters (and the amount of each such

distribution did not exceed adjusted operating surplus for each such quarter), to reset the initial target distribution levels at higher levels based on our cash distributions at the time of the exercise of the reset election. Following a reset election by our general partner, the minimum quarterly distribution will be adjusted to equal the reset minimum quarterly distribution, and the target distribution levels will be reset to correspondingly higher levels based on the same percentage increases above the reset minimum quarterly distribution reflected by the current target distribution levels.

If our general partner elects to reset the target distribution levels, it will be entitled to receive a number of common units equal to the number of common units which would have entitled our general partner to an aggregate quarterly cash distribution in the prior quarter equal to the distributions to our general partner on the incentive distribution rights in such quarter. We anticipate that our general partner would exercise this reset right in order to facilitate acquisitions or internal growth projects that would not be sufficiently accretive to cash distributions per common unit without such conversion. It is possible, however, that our general partner could exercise this reset election at a time when it is experiencing, or expects to experience, declines in the cash distributions it receives related to its incentive distribution rights and may, therefore, desire to be issued common units rather than retain the right to receive incentive distributions based on the initial target distribution levels. As a result, a reset election may cause our common unitholders to experience a reduction in the amount of cash distributions that they would have otherwise received had we not issued new common units to our general partner in connection with resetting the target distribution levels. Please read “How We Make Distributions to Our Partners—Our General Partner’s Right to Reset Incentive Distribution Levels.”

Our partnership agreement will designate the Court of Chancery of the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by our unitholders, which would limit our unitholders’ ability to choose the judicial forum for disputes with us or our general partner’s directors, officers or other employees.

Our partnership agreement will provide that, with certain limited exceptions, the Court of Chancery of the State of Delaware will be the exclusive forum for any claims, suits, actions or proceedings (1) arising out of or relating in any way to our partnership agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of our partnership agreement or the duties, obligations or liabilities among limited partners or of limited partners to us, or the rights or powers of, or restrictions on, the limited partners or us), (2) brought in a derivative manner on our behalf, (3) asserting a claim of breach of a duty owed by any director, officer or other employee of our general partner, or owed by our general partner, to us or the limited partners, (4) asserting a claim arising pursuant to any provision of the Delaware Revised Uniform Limited Partnership Act (the “Delaware Act”), or (5) asserting a claim against us governed by the internal affairs doctrine. These provisions may have the effect of discouraging lawsuits against us and our general partner’s directors and officers. For additional information about the exclusive forum provision of our partnership agreement, please read “The Partnership Agreement—Applicable Law; Exclusive Forum.”

Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors, which could reduce the price at which our common units will trade.

Unlike the holders of common stock in a corporation, our unitholders will have only limited voting rights on matters affecting our business and, therefore, limited ability to influence management’s decisions regarding our business. Our unitholders will have no right on an annual or ongoing basis to elect our general partner or its board of directors. The board of directors of our general partner, including the independent directors, will be chosen entirely by GPM due to its

ownership of our general partner, and not by our unitholders. Please read “Management—Management of GPM Petroleum LP” and “Certain Relationships and Related Transactions.” Unlike a publicly traded corporation, we will not conduct annual meetings of our unitholders to elect directors or conduct other matters routinely conducted at annual meetings of stockholders of corporations. Our partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting our unitholders’ ability to influence the manner or direction of management. As a result of these limitations, the price at which the common units will trade could be diminished because of the absence or reduction of a takeover premium in the trading price.

Even if holders of our common units are dissatisfied, they cannot initially remove our general partner without its consent.

If our unitholders are dissatisfied with the performance of our general partner, they will have limited ability to remove our general partner. Unitholders initially will be unable to remove our general partner without its consent because our general partner and its affiliates will own sufficient units upon the completion of this offering to be able to prevent its removal. The vote of the holders of at least 66²/₃% of all our outstanding common and subordinated units voting together as a single class is required to remove our general partner. Following the closing of this offering, GPM will own, directly or indirectly, an aggregate of % of our common and subordinated units (or % of our common and subordinated units, if the underwriters exercise their option to purchase additional common units in full). Also, if our general partner is removed without cause during the subordination period and no units held by our general partner or its affiliates are voted in favor of that removal, all remaining subordinated units will automatically convert into common units and any existing arrearages on the common units will be extinguished. Cause is narrowly defined in our partnership agreement to mean that a court of competent jurisdiction has entered a final, non-appealable judgment finding our general partner liable to us or our limited partners for actual fraud or willful misconduct in its capacity as our general partner. Cause does not include most cases of charges of poor management of the business.

Unitholders will experience immediate and substantial dilution in net tangible book value of $ per common unit.

The estimated initial public offering price of $ per common unit (the midpoint of the price range set forth on the cover of this prospectus) exceeds our net tangible book value of $ per common unit. Based on the estimated initial public offering price of $ per common unit, unitholders will incur immediate and substantial dilution of $ per common unit. Please read “Dilution.”

Our general partner interest or the control of our general partner may be transferred to a third party without unitholder consent.

Our general partner may transfer its general partner interest to a third party without the consent of our unitholders in a merger, in a sale of all or substantially all of its assets or in other transactions so long as certain conditions are satisfied. Please read “The Partnership Agreement—Transfer of General Partner Interest.” Furthermore, our partnership agreement does not restrict the ability of GPM to transfer all or a portion of its direct or indirect interest in our general partner to a third party. Any new owner of our general partner or our general partner interest would then be in a position to replace the board of directors and executive officers of our general partner with its own designees without the consent of unitholders and thereby exert significant control over us, and may change our business strategy. Any of these changes, or any other changes resulting from a change in control of our general partner or general partner interest, may lower the trading price of our common units and otherwise have a material adverse effect on us.

The incentive distribution rights may be transferred by our general partner to a third party without unitholder consent.

Our general partner may transfer all or a portion of its incentive distribution rights to a third party at any time without the consent of our unitholders. If our general partner transfers the incentive distribution rights to a third party but GPM retains its ownership interest in our general partner, GPM would not have the same incentive to grow our partnership and increase quarterly distributions to unitholders over time as it would if GPM had retained ownership of the incentive distribution rights. For example, a transfer of incentive distribution rights by GPM could reduce the likelihood of GPM renewing the GPM Distribution Contracts or otherwise negotiating supply terms with respect to future volumes, as GPM would have less of an economic incentive to grow our business.

Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price.

If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by unaffiliated persons at a price equal to the greater of (1) the average of the daily closing price of the common units over the 20 trading days preceding the date three days before notice of exercise of the call right is first mailed and (2) the highest per-unit price paid by our general partner or any of its affiliates for common units during the 90-day period preceding the date such notice is first mailed. As a result, unitholders may be required to sell their common units at an undesirable time or price and may not receive any return or a negative return on their investment. Unitholders may also incur a tax liability upon a sale of their units. Our general partner is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon exercise of the limited call right. There is no restriction in our partnership agreement that prevents our general partner from issuing additional common units and exercising its call right. If our general partner exercised its limited call right, the effect would be to take us private and, if the units were subsequently deregistered, we would no longer be subject to the reporting requirements of the Exchange Act. Upon the expiration of 30 days following this offering, assuming no exercise of the underwriters’ option to purchase additional common units, GPM will own, directly or indirectly, an aggregate of approximately % of our common and subordinated units. At the end of the subordination period, assuming no additional issuances of units (other than upon the conversion of the subordinated units), GPM will own approximately % of our common units. For additional information about the limited call right, please read “The Partnership Agreement—Limited Call Right.”

We may issue additional units without unitholder approval, which would dilute existing unitholder ownership interests.

Our partnership agreement does not limit the number of additional limited partner interests we may issue at any time without the approval of our unitholders, including limited partner interests that are senior to our common units. The issuance of additional common units or other equity interests of equal or senior rank will have the following effects:

•

our existing unitholders’ proportionate ownership interest in us will decrease;

•

the amount of cash available for distribution on each unit may decrease;

•

because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by our common unitholders will increase;

•

the ratio of taxable income to distributions may increase;

•

the relative voting strength of each previously outstanding unit may be diminished; and

•

the market price of the common units may decline.

For additional information, please read “The Partnership Agreement—Issuance of Additional Partnership Interests.”

There are no limitations in our partnership agreement on our ability to issue units ranking senior to the common units.

In accordance with Delaware law and the provisions of our partnership agreement, we may issue additional partnership interests that are senior to the common units in right of distribution, liquidation and voting. The issuance by us of units of senior rank may (i) reduce or eliminate the amount of cash available for distribution to our common unitholders; (ii) diminish the relative voting strength of the total common units outstanding as a class; or (iii) subordinate the claims of the common unitholders to our assets in the event of our liquidation.

The market price of our common units could be adversely affected by sales of substantial amounts of our common units in the public or private markets, including sales by GPM or other large holders.

After this offering, we will have common units and subordinated units outstanding, which includes the common units we are selling in this offering that may be resold in the public market immediately ( common units if the underwriters exercise in full their option to purchase additional common units). All of the subordinated units will convert into common units on a one-for-one basis at the end of the subordination period. Although all of the common units ( common units if the underwriters exercise in full their option to purchase additional common units) that are issued to GPM or a wholly owned subsidiary of GPM will be subject to resale restrictions, such restrictions may be waived in the discretion of certain of the underwriters. In addition, under our partnership agreement, our general partner and its affiliates have registration rights relating to the offer and sale of any units that they hold, subject to certain limitations. Please read “Units Eligible for Future Sale.” Sales by GPM, the SteelPath Funds or other large holders of a substantial number of our common units in the public markets following this offering, or the perception that such sales might occur, could have a material adverse effect on the price of our common units or could impair our ability to obtain capital through an offering of equity securities.

Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our outstanding common units.

Our partnership agreement restricts unitholders’ voting rights by providing that any units held by a person or group that owns 20% or more of any class of units then outstanding, other than our general partner and its affiliates, their transferees and persons who acquired such units with the prior approval of the board of directors of our general partner, cannot vote on any matter.

Cost reimbursements due to our general partner and its affiliates for services provided to us or on our behalf will reduce cash available for distribution to our unitholders. The amount and timing of such reimbursements will be determined by our general partner.

Prior to making any distribution on the common units, pursuant to our omnibus agreement, we will not be obligated to reimburse GPM for certain general and administrative expenses it

would otherwise allocate to us until we generate an aggregate gross profit of at least $55 million for the prior four quarters. Thereafter, we will be obligated to reimburse GPM for general and administrative expenses through a set fee in an amount equal to 2% of our annual gross profit. The cap contained in the omnibus agreement does not apply to incremental general and administrative expenses we expect to incur as a result of becoming a publicly traded partnership. In addition, we will reimburse GPM for third-party costs incurred by GPM and its affiliates in providing general and administrative services. Neither our partnership agreement nor our omnibus agreement will otherwise limit the amount of expenses for which our general partner and its affiliates may be reimbursed. Our omnibus agreement and partnership agreement provide that our general partner will determine in good faith the expenses that are allocable to us. The reimbursement of expenses and payment of fees to our general partner and its affiliates will reduce the amount of cash available to pay cash distributions to our unitholders. Please read “Cash Distribution Policy and Restrictions on Distributions.”

The amount of cash we have available for distribution to holders of our units depends primarily on our cash flow and not solely on profitability, which may prevent us from making cash distributions, even during periods when we record net income.

The amount of cash we have available for distribution depends primarily upon our cash flow, including cash flow from working capital or other borrowings, and not solely on our profitability, which will be affected by non-cash items. As a result, we may pay cash distributions during periods when we record net losses for financial accounting purposes and may not pay cash distributions during periods when we record net income for financial accounting purposes.

Prior to this offering, there has been no public market for our common units. After this offering, there will be only publicly traded common units ( common units if the underwriters exercise their option to purchase additional common units in full). We do not know the extent to which investor interest will lead to the development of a trading market or how liquid that market might be. Unitholders may not be able to resell their common units at or above the initial public offering price. Additionally, the lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of the common units and limit the number of investors who are able to buy the common units.

The initial public offering price for our common units will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of the market price of the common units that will prevail in the trading market. The market price of our common units may decline below the initial public offering price. The market price of our common units may also be influenced by many factors, some of which are beyond our control, including:

•

our quarterly distributions;

•

our quarterly or annual earnings or those of other companies in our industry;

•

announcements by us or our competitors of significant contracts or acquisitions;

•

changes in accounting standards, policies, guidance, interpretations or principles;

•

general economic conditions;

•

the failure of securities analysts to cover our common units after this offering or changes in financial estimates by analysts;

•

future sales of our common units; and

•

the other factors described in these “Risk Factors.”

Unitholders may have liability to repay distributions and in certain circumstances may be personally liable for the obligations of the partnership.

Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under Section 17-607 of the Delaware Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets. Delaware law provides that for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount. A purchaser of units who becomes a limited partner is liable for the obligations of the transferring limited partner to make contributions to the partnership that are known to such purchaser at the time it became a limited partner and for unknown obligations if the liabilities could be determined from the partnership agreement. Liabilities to partners on account of their partnership interests and liabilities that are non-recourse to the partnership are not counted for purposes of determining whether a distribution is permitted.

In addition, it may be determined that the right, or the exercise of the right by the limited partners as a group, to (i) remove or replace our general partner, (ii) approve some amendments to our partnership agreement or (iii) take other action under our partnership agreement constitutes “participation in the control” of our business. A limited partner that participates in the control of our business within the meaning of the Delaware Act may be held personally liable for our obligations under the laws of Delaware, to the same extent as our general partner. This liability would extend to persons who transact business with us under the reasonable belief that the limited partner is a general partner. In addition, we conduct business in a number of other states in which the limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established. Neither our partnership agreement nor the Delaware Act specifically provides for legal recourse against our general partner if a limited partner were to lose limited liability through any fault of our general partner. Please read “The Partnership Agreement—Limited Liability.”

The NYSE does not require a publicly traded partnership like us to comply with certain corporate governance requirements.

We intend to apply to list our common units on the NYSE. Because we will be a publicly traded partnership, the NYSE will not require us to have a majority of independent directors on our general partner’s board of directors or to establish a compensation committee or a nominating and corporate governance committee. Accordingly, unitholders will not have the same protections afforded to stockholders of corporations that are subject to all of the corporate governance requirements of the applicable stock exchange. Please read “Management—Management of GPM Petroleum LP.”

We will incur increased costs as a result of being a publicly traded partnership.

We have no history operating as a publicly traded partnership. As a publicly traded partnership, we will incur significant legal, accounting and other expenses that we did not incur

prior to this offering. In addition, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and Dodd-Frank Act, as well as rules implemented by the SEC and the NYSE, require, or will require, publicly traded entities to adopt various corporate governance practices that will further increase our costs, including requirements to have at least three independent directors, create an audit committee and adopt policies regarding internal controls and disclosure controls and procedures, including the preparation of reports on internal control over financial reporting.

Following this offering, we will become subject to the public reporting requirements of the Exchange Act. We expect these rules and regulations to increase certain of our legal and financial compliance costs and to make certain activities more time-consuming and costly. We also expect to incur significant expense in order to obtain director and officer liability insurance. Because of the limitations in coverage for directors, it may be more difficult for us to attract and retain qualified persons to serve on our general partner’s board or as executive officers.

We estimate that we will incur approximately $1.6 million of incremental third-party costs per year associated with being a publicly traded partnership. However, it is possible that our actual incremental costs of being a publicly traded partnership will be higher than we currently estimate. Before we are able to make distributions to our unitholders, we must first pay or reserve cash for our expenses, including the costs of being a publicly traded partnership. As a result, the amount of cash we have available for distribution to our unitholders will be reduced by the costs associated with being a public company.

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements that apply to other public companies, including those relating to auditing standards and disclosure about our executive compensation.

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for “emerging growth companies,” including certain requirements relating to auditing standards and compensation disclosure. We are classified as an emerging growth company. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things, (1) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, (2) comply with any future PCAOB rules requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide an auditor discussion and analysis, as well as any other PCAOB rules adopted after the JOBS Act enactment dates unless the SEC determines that those rules are necessary and in the public interest or (3) provide certain disclosure regarding executive compensation required of larger public companies.

If we fail to establish and maintain effective internal controls over financial reporting, our ability to accurately report our financial results could be adversely affected.

We are not currently required to comply with the SEC’s rules implementing Section 404 of the Sarbanes- Oxley Act of 2002, and are therefore not required to make a formal assessment of the effectiveness of our internal controls over financial reporting for that purpose. Upon becoming a publicly traded partnership, we will be required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act of 2002, which will require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal controls over financial reporting. Though we will be required to disclose material changes made to our internal controls and procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal

controls over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC. To comply with the requirements of being a publicly traded partnership, we may need to implement additional internal controls, reporting systems and procedures and hire additional accounting, finance and legal staff. Furthermore, while we generally must comply with Section 404 of the Sarbanes-Oxley Act of 2002 for our fiscal year ending December 31, 2018, we are not required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until our first annual report subsequent to our ceasing to be an “emerging growth company” within the meaning of Section 2(a)(19) of the Securities Act. Accordingly, we may not be required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until our annual report for the fiscal year ending December 31, 2021. Once it is required to do so, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, operated or reviewed.

An increase in interest rates will increase our borrowing costs and may cause the market price of our common units to decline.

Like all equity investments, an investment in our common units is subject to certain risks. Borrowings under our credit facilities bear interest at variable rates. If market interest rates increase, such variable-rate debt will create higher debt service requirements, which could adversely affect our cash flow and ability to make cash distributions. In exchange for accepting these risks, investors may expect to receive a higher rate of return than would otherwise be obtainable from lower-risk investments. Accordingly, as interest rates rise, the ability of investors to obtain higher risk-adjusted rates of return by purchasing government-backed debt securities may cause a corresponding decline in demand for riskier investments generally, including yield-based equity investments such as publicly traded limited partnership interests. Reduced demand for our common units resulting from investors seeking other more favorable investment opportunities may cause the trading price of our common units to decline.

Tax Risks to Common Unitholders

In addition to reading the following risk factors, please read “Material U.S. Federal Income Tax Consequences” for a more complete discussion of the expected material federal income tax consequences of owning and disposing of common units.

The anticipated after-tax economic benefit of an investment in our common units depends largely on our being treated as a partnership for federal income tax purposes.

Despite the fact that we are organized as a limited partnership under Delaware law, we would be treated as a corporation for U.S. federal income tax purposes unless we satisfy a “qualifying income” requirement. Based upon our current operations, we believe we satisfy the qualifying income requirement. However, no ruling has been or will be requested regarding our treatment as a partnership for U.S. federal income tax purposes. Failing to meet the qualifying income requirement or a change in current law could cause us to be treated as a corporation for U.S. federal income tax purposes or otherwise subject us to taxation as an entity.

If we were treated as a corporation for federal income tax purposes, we would pay U.S. federal income tax on our taxable income at the corporate tax rate, which is currently a maximum of 35%, and would likely pay state income tax at varying rates. Distributions to our unitholders would generally be taxed again as corporate distributions, and no income, gains, losses or deductions would flow through to our unitholders. Because a tax would be imposed upon us as a corporation, our cash available for distribution to our unitholders would be substantially reduced. Therefore, treatment of us as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to our unitholders, likely causing a substantial reduction in the value of our common units.

At the state level, several states have been evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise or other forms of taxation. Specifically, we currently own assets and conduct business in several states, many of which impose a margin or franchise tax. In the future, we may expand our operations. Imposition of a similar tax on us in other jurisdictions that we may expand to could substantially reduce our cash available for distribution to our unitholders.

Our partnership agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or otherwise subjects us to entity-level taxation for U.S. federal, state, local or foreign income tax purposes, the minimum quarterly distribution amount and the target distribution amounts may be adjusted to reflect the impact of that law or interpretation on us.

The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes or differing interpretations, possibly applied on a retroactive basis.

The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units may be modified by administrative, legislative or judicial changes or differing interpretations at any time. From time to time, members of the U.S. Congress propose and consider substantive changes to the existing U.S. federal income tax laws that affect publicly traded partnerships. Although there is no current legislative proposal, a prior legislative proposal would have eliminated the qualifying income exception to the treatment of all publicly traded partnerships as corporations upon which we rely for our treatment as a partnership for U.S. federal income tax purposes.

In addition, on January 24, 2017, final regulations regarding which activities give rise to qualifying income within the meaning of Section 7704 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) were published in the Federal Register (the “Final Regulations”). The Final Regulations are effective as of January 19, 2017, and apply to taxable years beginning on or after January 19, 2017. We do not believe the Final Regulations affect our ability to be treated as a partnership for U.S. federal income tax purposes.

However, any modification to the U.S. federal income tax laws may be applied retroactively and could make it more difficult or impossible for us to meet the exception for certain publicly traded partnerships to be treated as partnerships for U.S. federal income tax purposes. We are unable to predict whether any of these changes or other proposals will ultimately be enacted. Any similar or future legislative changes could negatively impact the value of an investment in our common units.

The sale or exchange of 50% or more of our capital and profits interests during any twelve-month period will result in the termination of our partnership for federal income tax purposes.

We will be considered to have terminated our partnership for federal income tax purposes if there is a sale or exchange of 50% or more of the total interests in our capital and profits within a

twelve-month period. Immediately following this offering, GPM will own more than 50% of the total interests in our capital and profits. Therefore, a transfer by GPM of all or a portion of its interests in us, in conjunction with the trading of common units held by the public, could result in a termination of our partnership for federal income tax purposes. For purposes of determining whether the 50% threshold has been met, multiple sales of the same interest will be counted only once.

Our termination would, among other things, result in the closing of our taxable year for all unitholders, which would result in us filing two tax returns for one calendar year and could result in a significant deferral of depreciation or amortization deductions allowable in computing our taxable income. In the case of a unitholder reporting on a taxable year other than a calendar year, the closing of our taxable year may also result in more than twelve months of our taxable income or loss being includable in taxable income for the unitholder’s taxable year that includes our termination. Our termination would not affect our classification as a partnership for U.S. federal income tax purposes, but it would result in our being treated as a new partnership for U.S. federal income tax purposes following the termination. If we were treated as a new partnership, we would be required to make new tax elections and could be subject to penalties if we were unable to determine that a termination occurred. The Internal Revenue Service (the “IRS”) has announced a relief procedure whereby if a publicly traded partnership that has technically terminated requests and the IRS grants special relief, among other things, the partnership may be permitted to provide only a single Schedule K-1 to unitholders for the two short tax periods included in the year in which the termination occurs. Please read “Material U.S. Federal Income Tax Consequences—Disposition of Units—Technical Termination” for a discussion of the consequences of our termination for federal income tax purposes.

A tax gain or loss on the disposition of our common units could be more or less than unitholders expect.

If a unitholder sells common units, the unitholder will recognize a gain or loss equal to the difference between the amount realized and that unitholder’s tax basis in those common units. Because distributions in excess of a unitholder’s allocable share of our net taxable income decrease the tax basis in such unitholder’s common units, the amount, if any, of such prior excess distributions with respect to the units a unitholder sells will, in effect, become taxable income to a unitholder if it sells such units at a price greater than its tax basis in those units, even if the price such unitholder receives is less than its original cost. In addition, because the amount realized includes a unitholder’s share of our nonrecourse liabilities, if a unitholder sells its units, a unitholder may incur a tax liability in excess of the amount of cash they receive from the sale.

A substantial portion of the amount realized from a unitholder’s sale of our common units, whether or not representing gain, may be taxed as ordinary income to such unitholder due to potential recapture items, including depreciation and amortization recapture. Thus, a unitholder may recognize both ordinary income and capital loss from the sale of units if the amount realized on a sale of such units is less than such unitholder’s adjusted basis in the units. Net capital loss may only offset capital gains and, in the case of individuals, up to $3,000 of ordinary income per year. In the taxable period in which a unitholder sells its units, such unitholder may recognize ordinary income from our allocations of income and gain to such unitholder prior to the sale and from recapture items that generally cannot be offset by any capital loss recognized upon the sale of units.

Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them.

Investments in common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts (“IRAs”), and non-U.S. persons raise issues unique to them. For

example, virtually all of our income allocated to organizations that are exempt from federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income and will be taxable to them. Distributions to non-U.S. persons will be reduced by withholding taxes imposed at the highest applicable effective tax rate, and non-U.S. persons will be required to file U.S. federal tax returns and pay tax on their shares of our taxable income. Unitholders that are tax-exempt entities or non-U.S. persons should consult their tax advisors before investing in our common units.

If the IRS were to contest the federal income tax positions we take, it may adversely impact the market for our common units, and the costs of any such contest would reduce cash available for distribution to our unitholders.

We have not requested a ruling from the IRS with respect to our treatment as a partnership for U.S. federal income tax purposes. The IRS may adopt positions that differ from the positions we take in the future. It may be necessary to resort to administrative or court proceedings to sustain some or all of the positions we take. A court may not agree with some or all of the positions we take. Any contest with the IRS may materially and adversely impact the market for our common units and the price at which they trade. Moreover, the costs of any contest between us and the IRS will result in a reduction in cash available for distribution to our unitholders and thus will be borne indirectly by our unitholders.

We treat each purchaser of our common units as having the same tax benefits without regard to the common units actually purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units.

Because we cannot match transferors and transferees of common units, we have adopted certain methods for allocating depreciation and amortization deductions that may not conform to all aspects of existing U.S. Treasury regulations (the “Treasury Regulations”) under the Code. Our counsel is unable to opine as to the validity of this approach. A successful IRS challenge to the use of these methods could adversely affect the amount of tax benefits available to our unitholders. It also could affect the timing of these tax benefits or the amount of gain from any sale of common units and could have a negative impact on the value of our common units or result in audit adjustments to a unitholder’s tax returns. Please read “Material U.S. Federal Income Tax Consequences—Tax Consequences of Unit Ownership—Section 754 Election” for further discussion of the effect of the depreciation and amortization positions we adopt.

We will prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders.

We will prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month based upon the ownership of our common units on the first day of each month (the “Allocation Date”), instead of on the basis of the date a particular common unit is transferred. Nevertheless, we generally allocate certain deductions for depreciation and amortization, gain or loss realized on a sale or other disposition of our assets and, in the discretion of the general partner, any other extraordinary item of income, gain, loss or deduction based upon ownership on the Allocation Date in the month in which such income, gain, loss or deduction is recognized. Treasury Regulations allow a similar monthly simplifying convention, but such regulations do not specifically authorize all aspects of our proration method. Accordingly, our counsel is unable to opine on the validity of this method. If the IRS were to challenge our proration method, we may be required to change the allocation of items of income,

gain, loss and deduction among our unitholders. Please read “Material U.S. Federal Income Tax Consequences—Disposition of Units—Allocations Between Transferors and Transferees.”

If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced.

Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us. To the extent possible under the new rules, our general partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if we are eligible, issue a revised Schedule K-1 to each unitholder with respect to an audited and adjusted return. Although our general partner may elect to have our unitholders take such audit adjustment into account in accordance with their interests in us during the tax year under audit, there can be no assurance that such election will be practical, permissible or effective in all circumstances. As a result, our current unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such unitholders did not own units in us during the tax year under audit. If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties and interest, our cash available for distribution to our unitholders might be substantially reduced. These rules are not applicable for tax years beginning on or prior to December 31, 2017.

We will adopt certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss and deduction. The IRS may challenge these methodologies or the resulting allocations, which could adversely affect the value of our common units.

In determining the items of income, gain, loss and deduction allocable to our unitholders, we must routinely determine the fair market value of our assets. Although we may, from time to time, consult with professional appraisers regarding valuation matters, we make many fair market value estimates using a methodology based on the market value of our common units as a means to measure the fair market value of our assets. The IRS may challenge these valuation methods and the resulting allocations of income, gain, loss and deduction.

A successful IRS challenge to these methods or allocations could adversely affect the timing or amount of taxable income or loss being allocated to our unitholders. It also could affect the amount of gain from our unitholders’ sale of common units and could have a negative impact on the value of the common units or result in audit adjustments to our unitholders’ tax returns without the benefit of additional deductions.

A unitholder whose units are the subject of a securities loan (e.g., a loan to a “short seller” to cover a short sale of units) may be considered to have disposed of those units. If so, such unitholder would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition.

Because there are no specific rules governing the U.S. federal income tax consequence of loaning a partnership interest, a unitholder whose units are the subject of a securities loan may be considered as having disposed of the loaned units. In that case, the unitholder may no longer be treated for tax purposes as a partner with respect to those units during the period of the loan to the short seller and the unitholder may recognize gain or loss from such disposition. Moreover, during the period of the loan, any of our income, gain, loss or deduction with respect to those units may

not be reportable by the unitholder and any cash distributions received by the unitholder as to those units could be fully taxable as ordinary income. Our counsel has not rendered an opinion regarding the treatment of a unitholder where common units are loaned to a short seller to effect a short sale of common units. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a securities loan are urged to modify any applicable brokerage account agreements to prohibit their brokers from borrowing their units.

Our unitholders will likely be subject to state and local taxes and income tax return filing requirements in jurisdictions where they do not live as a result of investing in our common units.

In addition to U.S. federal income taxes, our unitholders will likely be subject to other taxes, including foreign, state and local taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which we conduct business or own property now or in the future, even if they do not live in any of those jurisdictions. Our unitholders will likely be required to file foreign, state and local income tax returns and pay state and local income taxes in some or all of these various jurisdictions. Further, our unitholders may be subject to penalties for failure to comply with those requirements.

We currently own assets and conduct business in 18 states (primarily located in the Mid-Atlantic, Southeastern, Midwestern and Northeastern United States). Most of these states currently impose an income tax on individuals, corporations and other entities. As we make acquisitions or expand our business, we may own assets or conduct business in additional states that impose a personal income tax. It is our unitholders’ responsibility to file all United States federal, foreign, state and local tax returns. Our counsel has not rendered an opinion on the non-U.S., state or local tax consequences of an investment in our units.

Even if unitholders do not receive any cash distributions from us, unitholders will be required to pay taxes on their share of our taxable income.

Unitholders are required to pay federal income taxes and, in some cases, state and local income taxes, on unitholders’ share of our taxable income, whether or not they receive cash distributions from us. Unitholders may not receive cash distributions from us equal to their share of our taxable income or even equal to the actual tax due from them with respect to that income.

USE OF PROCEEDS

•

to make a loan of $78.0 million to GPM in exchange for a 30-year interest only note bearing interest at a fixed annual rate of 8% with the principal amount due at the end of the 30-year term; and

•

to repay $13.5 million outstanding under our line of credit which is due on January 12, 2021 and had an interest rate of 3.4% as of March 31, 2017.

GPM has informed us that the $78.0 million of proceeds that we loan to it will be used to repay indebtedness at the GPM level and for general corporate purposes.

If and to the extent the underwriters exercise their option to purchase additional common units, the number of additional common units purchased by the underwriters pursuant to such exercise will be issued to the public and the remainder of the additional common units, if any, will be issued to GPM or a wholly owned subsidiary of GPM. Any such units issued to GPM or a wholly owned subsidiary of GPM will be issued for no additional consideration. If the underwriters exercise their option to purchase additional common units in full, the additional net proceeds would be approximately $ million, (based upon the midpoint of the price range set forth on the cover page of this prospectus), after deducting underwriting discounts and offering expenses. The net proceeds received in connection with any exercise of such option will be used to fund a loan to GPM in exchange for a 30-year note bearing interest at a fixed annual rate of 8%. If the underwriters do not exercise their option to purchase additional common units, we will issue common units to GPM or a wholly owned subsidiary of GPM upon the option’s expiration. Accordingly, the exercise of the underwriters’ option will not affect the total number of common units outstanding or the amount of cash needed to pay the minimum quarterly distribution on all units. Please read “Underwriting.”

A $1.00 increase or decrease in the assumed initial public offering price of $ per common unit would cause the net proceeds from this offering, after deducting the estimated underwriting discount and offering expenses payable by us, to increase or decrease, respectively, by approximately $ million. In addition, we may also increase or decrease the number of common units we are offering. Each increase of 1.0 million common units offered by us, together with a concomitant $1.00 increase in the assumed initial public offering price to $ per common unit, would increase net proceeds to us from this offering by approximately $ million. Similarly, each decrease of 1.0 million common units offered by us, together with a concomitant $1.00 decrease in the assumed initial public offering price to $ per common unit, would decrease the net proceeds to us from this offering by approximately $ million. If we increase or decrease the number of common units offered, we will increase or decrease, respectively, the amount of funds retained for general partnership purposes. We may concomitantly increase or reduce, as applicable, the amount of indebtedness we will pay down. As a result, cash available for distribution per unit is expected to remain unchanged regardless of the changes in the number of common units offered.

CAPITALIZATION

The following table shows:

•

our historical cash and cash equivalents and capitalization as of March 31, 2017; and

•

our cash and cash equivalents and capitalization as of March 31, 2017, as adjusted to reflect the issuance and sale of common units to the public at an assumed initial offering price of $ per common unit (the midpoint of the price range set forth on the cover of this prospectus) and the application of the net proceeds from this offering as described under “Use of Proceeds.”

We derived this table from, and it should be read in conjunction with and is qualified in its entirety by reference to, the unaudited condensed consolidated financial statements and the accompanying notes included elsewhere in this prospectus. You should also read this table in conjunction with “Summary—Formation Transactions and Partnership Structure,” “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


	As of March 31, 2017
	Historical		As Adjusted
	(in thousands)
Cash and cash equivalents	$	1,893	$
U.S. Treasury or other investment grade securities		31,825

Cash and restricted investments	$	33,718	$

Debt:
Term loan facility		32,416
Revolving credit facility		13,500

Total debt	$	45,916	$

Partners’ equity:
Limited partner interests	$	21,079	$
General partner interest		—

Total partners’ equity	$	21,079	$

Total capitalization	$	66,995	$

DILUTION

Dilution is the amount by which the offering price paid by the purchasers of common units sold in this offering will exceed the net tangible book value per common unit after the offering. Based on an assumed initial public offering price of $ per common unit, on an as adjusted basis as of March 31, 2017, after giving effect to the offering of common units, our net tangible book value was approximately $ million, or $ per common unit. Purchasers of our common units in this offering will experience substantial and immediate dilution in net tangible book value per common unit for financial accounting purposes, as illustrated in the following table.


Assumed initial public offering price per common unit		$
Net tangible book value per unit before the offering (1)	$
Increase in net tangible book value per unit attributable to purchasers in the offering
Less: Net tangible book value per unit after the offering (2)

Immediate dilution in net tangible book value per common unit to purchasers in the offering (3)(4)		$

(1)	Determined by dividing our net tangible book value by the total number of units ( common units and subordinated units) to be issued (i) to GPM or wholly-owned subsidiaries of GPM and its affiliates and (ii) common units to be issued to the Other Investors.

(2)	Determined by dividing our net tangible book value, after giving effect to the use of the net proceeds of the offering, by the total number of units ( common units and subordinated units) to be outstanding after the offering.

(3)	If the initial public offering price were to increase or decrease by $1.00 per common unit, then immediate dilution in net tangible book value per common unit would equal $ and $ , respectively.

(4)

Because the total number of units outstanding following this offering will not be impacted by any exercise of the underwriters’ option to purchase additional common units and any net proceeds from such exercise will not be retained by us, there will be no change to the dilution in net tangible book value per common unit to purchasers in the offering due to any such exercise of the option.

The following table sets forth the number of units that we will issue and the total consideration contributed to us by GPM and its subsidiaries, the Other Investors and the purchasers of our common units in this offering upon completion of the transactions contemplated by this prospectus and the expiration of the underwriters’ option period, assuming no exercise of the underwriters’ option to purchase additional common units.


	Units				Total Consideration
	Number	Percent			Amount	Percent
GPM and subsidiaries (1)(2)				%	$			%
Other Investors (2)				%	$			%
Purchasers in the offering (2)				%	$			%

Total			100	%	$		100	%

(1)	Upon the completion of the transactions contemplated by this prospectus, GPM and its subsidiaries will own common units and subordinated units.

(2)	Assumes the underwriters’ option to purchase additional common units is not exercised.

CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS

You should read the following discussion of our cash distribution policy in conjunction with “—Significant Forecast Assumptions” below, which includes the factors and assumptions upon which we base our cash distribution policy. In addition, you should read “Forward-Looking Statements” and “Risk Factors” for information regarding statements that do not relate strictly to historical or current facts and certain risks inherent in our business.

For additional information regarding our historical results of operations, you should refer to our audited historical financial statements as of and for the fiscal year ended December 31, 2016, the audited historical financial statements of our predecessor as of and for the fiscal year ended December 31, 2015, and our unaudited condensed consolidated financial statements as of March 31, 2017 and for the three months ended March 31, 2017 and 2016, and the accompanying notes included elsewhere in this prospectus.

General

Rationale for Our Cash Distribution Policy

The board of directors of our general partner will adopt a cash distribution policy pursuant to which we intend to distribute at least the minimum quarterly distribution of $ per unit ($ per unit on an annualized basis) on all of our units to the extent we have sufficient cash after the establishment of cash reserves and the payment of our expenses, including payments to our general partner and its affiliates. We expect that if we are successful in executing our business strategy, we will grow our business in a sustainable manner and distribute to our unitholders a portion of any increase in our cash available for distribution resulting from such growth. Our partnership agreement does not quantitatively define or require the amount of cash available for distribution that will be distributed to our unitholders. Rather, that determination is made by the board of directors of our general partner after taking into account our current and future cash operating requirements and the long-term sustainability of our distributions, all as described in more detail in the bullet points below. The partnership agreement does quantitatively provide, however, our minimum quarterly distribution, as well as the incentive distributions to which our general partner is entitled if the board of directors of our general partner determines to make distributions to unitholders in excess of the minimum quarterly distribution. Our general partner has not established any cash reserves, and does not have any specific types of expenses for which it intends to establish reserves. We expect our general partner may establish reserves for specific purposes, such as major capital expenditures or debt service payments, or may choose to generally reserve cash in the form of excess distribution coverage from time to time for the purpose of maintaining stability or growth in our quarterly distributions. In addition, our general partner may cause us to borrow amounts to fund distributions in quarters when we generate less cash than is necessary to sustain or grow our cash distributions per unit. Our cash distribution policy reflects a judgment that our unitholders will be better served by our distributing rather than retaining our cash available for distribution.

The board of directors of our general partner may change our distribution policy at any time and from time to time, without a vote of our unitholders. Our partnership agreement does not require us to pay cash distributions on a quarterly or other basis.

Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy

There is no guarantee that we will make quarterly cash distributions to our unitholders. We do not have a legal or contractual obligation to pay our minimum quarterly distribution or any other

distribution. Our cash distribution policy may be changed at any time and is subject to certain restrictions and uncertainties, including the following:

•

Our cash distribution policy will be subject to restrictions on distributions under our credit facilities, which contain financial tests and covenants that we must satisfy. If we are unable to satisfy these covenants or if we are otherwise in default under our credit facilities, we will be prohibited from making cash distributions to you notwithstanding our stated cash distribution policy.

•

Our general partner will have the authority to establish cash reserves for the prudent conduct of our business and for future cash distributions to our unitholders, and the establishment of or increase in those reserves could result in a reduction in cash distributions from levels we currently anticipate pursuant to our stated cash distribution policy. Our partnership agreement does not set a limit on the amount of cash reserves that our general partner may establish. Any decision to establish cash reserves made by our general partner in good faith will be binding on our unitholders.

•

Pursuant to our omnibus agreement, we will not be obligated to reimburse GPM for certain general and administrative expenses it would otherwise allocate to us until we generate an aggregate gross profit of at least $55 million for the prior four quarters. Thereafter, prior to making any distribution on our common units, we will be obligated to reimburse GPM for general and administrative expenses through a set fee in an amount equal to 2% of our annual gross profit. The cap contained in the omnibus agreement does not apply to incremental general and administrative expenses we expect to incur as a result of becoming a publicly traded partnership. In addition, we will reimburse GPM for third-party costs incurred by GPM and its affiliates in providing general and administrative services. Neither our partnership agreement nor the omnibus agreement will otherwise limit the amount of expenses for which our general partner and its affiliates may be reimbursed. Our partnership agreement provides that our general partner will determine the expenses that are allocable to us. The reimbursement of expenses and payment of fees, if any, to our general partner and its affiliates will reduce the amount of cash available to pay distributions to our unitholders.

•

Even if our cash distribution policy is not modified or revoked, the decisions regarding the amount of distributions to pay under our cash distribution policy and whether to pay any distribution are made by our general partner, taking into consideration the terms of our partnership agreement.

•

Under Section 17-607 of the Delaware Act, we may not make a distribution if the distribution would cause our liabilities to exceed the fair value of our assets.

•

We may lack sufficient cash to pay distributions to our unitholders due to cash flow shortfalls attributable to a number of operational, commercial or other factors as well as increases in our operating or general and administrative expenses, principal and interest payments on our outstanding debt, tax expenses, working capital requirements or anticipated cash needs.

•

If we make distributions out of capital surplus, as opposed to operating surplus, any such distributions would constitute a return of capital and would result in a reduction in the minimum quarterly distribution and the target distribution levels. Please read “How We Make Distributions to Our Partners—Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels.” We do not anticipate that we will make any distributions from capital surplus.

•

Our ability to make distributions to our unitholders depends on the performance of our subsidiary, GPM OpCo, and its ability to distribute cash to us. The ability of GPM OpCo to

make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable state partnership and limited liability company laws and other laws and regulations.

To the extent that our general partner determines not to distribute the full minimum quarterly distribution on our common units with respect to any quarter during the subordination period, the common units will accrue an arrearage equal to the difference between the minimum quarterly distribution and the amount of the distribution actually paid on the common units with respect to that quarter. The aggregate amount of any such arrearages must be paid on the common units before any distributions of cash available for distribution from operating surplus may be made on the subordinated units and before any subordinated units may convert into common units. The subordinated units will not accrue any arrearages. Any shortfall in the payment of the minimum quarterly distribution on the common units with respect to any quarter during the subordination period may decrease the likelihood that our quarterly distribution rate would increase in subsequent quarters. Please read “How We Make Distributions to Our Partners—Subordination Period.”

Our Ability to Grow is Dependent on Our Ability to Access External Expansion Capital

We expect to generally distribute a significant percentage of our cash from operations to our unitholders on a quarterly basis, after the establishment of cash reserves and payment of our expenses. Therefore, we will need to rely primarily upon external financing sources, including commercial bank borrowings and issuances of debt and equity securities, to fund any future expansion capital expenditures. To the extent we are unable to finance growth externally, our cash distribution policy will significantly impair our ability to grow. Our growth may not be as fast as that of businesses that reinvest all of their cash to expand ongoing operations. To the extent we issue additional units, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level. There are no limitations in our partnership agreement or in our credit facilities (subject to change of control provisions in our credit facilities) on our ability to issue additional units, including units ranking senior to the common units. The incurrence of additional commercial bank borrowings or other debt to finance our growth would result in increased interest expense, which in turn may impact the cash available for distribution to our unitholders.

Our Minimum Quarterly Distribution

Upon completion of this offering, we intend to make minimum quarterly distributions of $ per unit for each complete quarter, or $ per unit on an annualized basis. Quarterly distributions, if any, will be made within 45 days after the end of each quarter. This equates to an aggregate cash distribution of approximately $ million per quarter, or approximately $ million per year, based on the number of common and subordinated units expected to be outstanding immediately after completion of this offering. Our ability to make cash distributions at the minimum quarterly distribution rate will be subject to the factors described above under “—General—Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy.” In connection with the closing of this offering, we expect that the board of directors of our general partner will approve grants under our 2017 Long-Term Incentive Plan (the “LTIP”) of phantom units (i) equal in value to approximately $ million, in the aggregate, to our general partner’s officers ($ million of which will be granted to our general partner’s executive officers) and (ii) equal in value to approximately $ to our directors who are not employees or officers of our general partner. The phantom units granted to officers of our general partner and its affiliates will vest as follows: 25% will vest upon the closing of this offering and the remaining 75% will vest at the rate of 25% on each of the second, third and fourth anniversaries of the

Formation Date. Phantom units will not contain any rights to receive distributions made with respect to our common units or distribution equivalents. Phantom units will be settled by the issuance of a common unit for each vested phantom unit on the earlier of (i) the officer’s termination of employment (to the extent the phantom units are vested) or (ii) January 12, 2020. Please read “Executive Compensation—Long-Term Incentive Plan.” The table below sets forth the number of common units and subordinated units that will be outstanding immediately after this offering, assuming that the underwriters do not exercise their option to purchase additional common units, and the cash available for distribution needed to pay the aggregate minimum quarterly distribution on all of such units for a single fiscal quarter and a four quarter period:

Number of
Units

Distributions

One Quarter

Annualized

Publicly held common units (1)

Common units held by GPM and its affiliates (1)

Subordinated units held by GPM and its affiliates

Total

(1)	Does not include any common units that may be issued under the long-term incentive plan that our general partner is expected to adopt prior to the closing of this offering.

If the underwriters do not exercise their option to purchase additional common units, we will issue common units to GPM or a wholly owned subsidiary of GPM at the expiration of the option period. If and to the extent the underwriters exercise their option to purchase additional common units, the number of common units purchased by the underwriters pursuant to such exercise will be issued to the public, and the remainder, if any, will be issued to GPM or a wholly owned subsidiary of GPM for no additional consideration. Accordingly, the exercise of the underwriters’ option will not affect the total number of units outstanding or the amount of cash needed to pay the minimum quarterly distribution on all units.

Our general partner will also hold our incentive distribution rights, which entitle the holder to increasing percentages, up to a maximum of 50.0% of the cash we distribute in excess of $ per unit per quarter.

We will pay our distributions around the last business day of the month of each of February, May, August and November to holders of record on or about the 1st day of each such month. If the distribution date does not fall on a business day, we will make the distribution on the business day immediately preceding the indicated distribution date. We will adjust the quarterly distribution for the period from the closing of this offering through , 2017 based on the actual length of the period.

Subordinated Units

GPM will initially own, directly or indirectly, all of our subordinated units. The principal difference between our common units and subordinated units is that in any quarter during the subordination period, holders of the subordinated units will not be entitled to receive any distribution until the common units have received the minimum quarterly distribution plus any arrearages in the payment of the minimum quarterly distribution from prior quarters. To the extent that we do not pay the minimum quarterly distribution on our common units, our common unitholders will not be entitled to receive such payments in the future except during the subordination period. Subordinated units will not accrue arrearages.

To the extent that we have cash available for distribution in any future quarter during the subordination period in excess of the amount necessary to pay the minimum quarterly distribution to holders of our common units, we will use this excess cash to pay any distribution arrearages on the common units related to prior quarters before any cash distribution is made to holders of subordinated units. When the subordination period ends, all of the subordinated units will convert into an equal number of common units. Please read “How We Make Distributions to Our Partners—Subordination Period.”

Unaudited As Adjusted Cash Available for Distribution for the Year Ended December 31, 2016 and the Twelve Months Ended March 31, 2017

If we had completed the transactions contemplated in this prospectus on January 1, 2016, our unaudited as adjusted cash available for distribution for the year ended December 31, 2016 and the twelve months ended March 31, 2017 would have been approximately $33.4 million and $35.6 million, respectively. This amount would have been insufficient to pay the full minimum quarterly distribution of $ per unit per quarter (or $ per unit on an annualized basis) on all of our common units and all of our subordinated units for the year ended December 31, 2016 and the twelve months ended March 31, 2017. Specifically, the amount of cash available that we generated during the year ended December 31, 2016 and the twelve months ended March 31, 2017, would have been sufficient to support a distribution of $ per common unit per quarter ($ per common unit on an annualized basis) and $ per common unit per quarter ($ per common unit on an annualized basis) on all of our common units, or approximately % and % of the minimum quarterly distribution, on all of our common units, respectively, and would not have supported distributions on our subordinated units. The twelve months ended March 31, 2017 are referred to herein as the “base period.”

Our calculation of unaudited as adjusted cash available for distribution includes incremental external general and administrative expenses that we expect to incur as a result of being a publicly traded partnership, including costs associated with SEC reporting requirements, tax return and Schedule K-1 preparation and distribution, independent auditor fees, investor relations activities, Sarbanes-Oxley Act compliance, stock exchange listing, registrar and transfer agent fees, incremental director and officer liability insurance and director compensation. We estimate that these incremental external general and administrative expenses initially will be approximately $1.6 million per year. Such expenses are not reflected in our financial statements.

Our unaudited as adjusted cash available for distribution does not purport to present our results of operations had the transactions contemplated in this prospectus actually been completed as of the dates indicated. Furthermore, cash available for distribution is a cash accounting concept, while our financial statements were prepared on an accrual basis. We derived the amounts of unaudited as adjusted cash available for distribution stated above in the manner shown in the table below. As a result, the amount of unaudited as adjusted cash available for distribution should only be viewed as a general indication of the amount of cash available for distribution that we might have generated had we been formed and completed the transactions contemplated in this prospectus in earlier periods.

Our unaudited as adjusted cash available for distribution included in the table below should be read together with “Summary—Summary Historical Financial and Operating Data,” “Selected Historical Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited historical financial statements, the audited historical financial statements of our predecessor and the unaudited financial statements included elsewhere in this prospectus.

The following tables illustrate our unaudited as adjusted cash available for distribution for the year ended December 31, 2016 and the twelve months ended March 31, 2017. The footnotes to the table below provide additional information about the adjustments and should be read along with the table.

GPM Petroleum LP

Unaudited As Adjusted Cash Available for Distribution


	Year Ended December 31, 2016			Twelve Months Ended March 31, 2017
	(in thousands, except per unit data)
Revenues:
Fuel revenue - related-party	$	950,796		$	1,097,417
Fuel revenue		60,243			44,255
Rental income		316			327
Other income		317			390

Total revenues	$	1,011,672		$	1,142,389

Gross profit:
Fuel revenue - related-party	$	28,533		$	31,202
Fuel revenue		1,241			821
Rental income		316			327
Other income		317			390

Total gross profit	$	30,407		$	32,740

Operating expenses:
Site operating expense	$	—		$	—
Long-term incentive and equity compensation expense (1)		3,125			1,625
General and administrative		461			480
Allocated general and administrative		1,498			1,531
Depreciation and amortization		2,349			2,877

Total operating expenses		7,433			6,513

Operating income		22,974			26,227
Interest income—GPM Note (2)		(6,240	)		(6,240	)
Interest expense, net		1,470			1,540

Net income	$	27,744		$	30,927

Net income per common unit—basic and diluted (3)	$			$
Net income per subordinated unit—basic and diluted (3)	$			$
Adjustments to reconcile net income to Adjusted EBITDA:
Net income	$	27,744		$	30,927
Add:
Long-term incentive and equity compensation expense		3,125			1,625
Allocated general and administrative expenses		1,498			1,531
Interest expense, net		1,470			1,540
Depreciation and amortization		2,349			2,877

Adjusted EBITDA (4)	$	36,186		$	38,500

Adjustments to reconcile Adjusted EBITDA to as adjusted cash available for distribution:
Less:
Cash interest expense, net (5)		1,063			1,128
Incremental external general and administrative expense (6)		1,620			1,640
Maintenance capital expenditures (7)		90			90
Expansion capital expenditures (7)		10,634			7,000
Add:
Borrowings used to fund expansion capital expenditures		10,600			7,000

As adjusted cash available for distribution	$	33,379		$	35,642

Cash distributions:
Distributions to public common unitholders
Distributions to GPM and its affiliates—common units
Distributions to GPM and its affiliates—subordinated units
Distributions to the SteelPath Funds—common units
Distributions to Fuel USA and its affiliates—common units

Total Distributions	$			$

Excess (shortfall) of as adjusted cash available for distribution over (below) aggregate minimum distributions	$			$

(1)	Represents expense associated with grants under our LTIP to (i) officers of our general partner and its affiliates and (ii) our general partner’s directors who are not employees or officers of our general partner. Please read “Executive Compensation—Long-Term Incentive Plan.”

(2)	Interest income associated with the $78.0 million loan to be made to GPM in connection with this offering in exchange for a 30-year note bearing interest at a fixed annual rate of 8%.

(3)

As adjusted net income per limited partner unit is determined by dividing the net income available to our common and subordinated unitholders by the number of common and subordinated units expected to be outstanding at the closing of the offering. For purposes of this calculation, we have assumed there will be common units and subordinated units outstanding and that we will make the minimum quarterly distribution on all of the common and subordinated units in every quarter of the periods presented.

(4)	Adjusted EBITDA is defined and reconciled to its most directly comparable financial measures calculated and presented in accordance with GAAP in “Summary—Non-GAAP Financial Measures.”

(5)	Cash interest expense excludes the amortization of deferred financing costs associated with all debt.

(6)

Reflects the incurrence of estimated incremental cash expenses associated with being a publicly traded partnership of approximately $1.6 million, including costs associated with SEC reporting requirements, tax return and Schedule K-1 preparation and distribution, independent auditor fees, investor relations activities, Sarbanes-Oxley Act compliance, stock exchange listing, registrar and transfer agent fees, incremental director and officer liability insurance and director compensation.

(7)

Historically, we have not made a distinction between maintenance capital expenditures and expansion capital expenditures. Under our partnership agreement, maintenance capital expenditures are capital expenditures made to maintain our long-term operating income or operating capacity and expansion capital expenditures are capital expenditures that we expect will increase our operating income or operating capacity over the long term. Examples of maintenance capital expenditures are those made to maintain existing contract volumes, including payments to renew existing distribution contracts, or to maintain our real estate leased to third-party dealers in leasable condition, such as parking lot or roof replacement/renovation, or to replace equipment required to operate our existing business. In contrast, expansion capital expenditures are those made to acquire additional assets to grow our business, such as new distribution contracts or real estate. We estimate that approximately $90,000 of our as adjusted capital expenditures were maintenance capital expenditures and that amounts paid for the GasMart Acquisition and JiffiStop Acquisition were expansion capital expenditures.

Unaudited Estimated Cash Available for Distribution for the Twelve Months Ending June 30, 2018

We forecast that our unaudited cash available for distribution during the twelve months ending June 30, 2018 will be approximately $44.2 million. This amount would be sufficient to pay the full minimum quarterly distribution of $ per unit on all of our common units and subordinated units for each quarter in the twelve months ending June 30, 2018. We have not included in our historical presentation or our forecast the period beginning April 1, 2017 and ending June 30, 2017. We expect our results of operations during this period to be generally consistent with and not differ materially from the trends reflected in our results for the twelve months ended March 31, 2017 and projected for the forecast twelve-month period ending June 30, 2018, other than the impact of any acquisitions. The assumed number of outstanding units upon which we have based our belief does not include any common units that may be issued under the long-term incentive plan that our general partner will adopt prior to the completion of this offering.

We are providing this forecast to supplement our historical financial statements in support of our belief that we will have sufficient cash available for distribution to pay the full minimum quarterly distribution on all of our common units and subordinated units for each quarter in the twelve months ending June 30, 2018. Please read “—Significant Forecast Assumptions” for further information as to the assumptions we have made for the forecast. Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” for information regarding the accounting policies we have followed for the forecast.

Our forecast reflects our judgment as of the date of this prospectus of the conditions we expect to exist and the course of action we expect to take during the twelve months ending June 30, 2018. We believe that we have a reasonable objective basis for these assumptions and that our actual results of operations will approximate those reflected in our forecast, but we can give no assurance that our forecasted results will be achieved. If our forecasted results are not achieved, we may not

be able to pay the minimum quarterly distribution or any other distribution on our common and subordinated units. The assumptions and estimates underlying the forecast are inherently uncertain and, although we consider them reasonable as of the date of this prospectus, they are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from forecasted results, including, among others, the risks and uncertainties described in “Risk Factors.” Accordingly, there can be no assurance that the forecast will be indicative of our future performance or that actual results will not differ materially from those presented in the forecast. Inclusion of the forecast in this prospectus should not be regarded as a representation by us, the underwriters or any other person that the results contained in the forecast will be achieved.

As a matter of course, we do not make public forecasts as to future revenues, earnings or other results. The forecast was not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in our view, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, our expected future course of action and financial performance. However, this information is not necessarily indicative of future results.

Neither our independent auditors, nor any other independent accountants, have compiled, examined or performed any procedures with respect to our forecast, nor have they expressed any opinion or any other form of assurance on our forecast or its achievability, and our independent auditors assume no responsibility for, and disclaim any association with, our forecast.

We do not undertake any obligation to release publicly any revisions or updates that we may make to the forecast or the assumptions used to prepare the forecast to reflect events or circumstances after the date of this prospectus. In light of this, the statement that we believe that we will have sufficient cash available for distribution to allow us to pay the full minimum quarterly distribution on all of our common and subordinated units for each quarter in the twelve months ending June 30, 2018 should not be regarded as a representation by us, the underwriters or any other person that we will make such distributions. Therefore, you are cautioned not to place undue reliance on this information.

The following table illustrates our estimated cash available for distribution for the twelve months ending June 30, 2018 and each of the four quarters in the twelve months ending June 30, 2018.

GPM Petroleum LP

Unaudited Estimated Cash Available for Distribution


	Three Months Ending												Twelve Months Ending June 30, 2018
	September 30, 2017			December 31, 2017			March 31, 2018			June 30, 2018			Twelve Months Ending June 30, 2018
	(in thousands, except per unit data)
Gallons:		242,794			222,331			204,612			235,501			905,238
Revenues:
Fuel revenue-related-party	$	393,297		$	360,275		$	331,336		$	380,810		$	1,465,718
Fuel revenue		2,530			2,192			2,241			3,117			10,080
Rental income		82			82			82			82			328
Other income		90			90			90			90			360

Total revenues	$	395,999		$	362,639		$	333,749		$	384,099		$	1,476,486

Gross profit:
Fuel revenue-related-party	$	10,847		$	9,936		$	9,138		$	10,503		$	40,424
Fuel revenue		23			20			20			28			91
Rental income		82			82			82			82			328
Other income		90			90			90			90			360

Total gross profit	$	11,042		$	10,128		$	9,330		$	10,703		$	41,203

Operating expenses:
Site operating expense	$	7		$	8		$	7		$	8		$	30
Long-term incentive and equity compensation expense (1)		2,250			375			375			375			3,375
General and administrative		125			125			125			125			500
Allocated general and administrative (6)		400			400			400			400			1,600
Depreciation and amortization		806			806			806			806			3,224

Total operating expenses		3,588			1,714			1,713			1,714			8,729

Operating income		7,454			8,414			7,617			8,989			32,474
Interest income—GPM Note (2)		(1,560	)		(1,560	)		(1,560	)		(1,560	)		(6,240	)
Interest expense, net		385			385			385			385			1,540

Net income	$	8,629		$	9,589		$	8,792		$	10,164		$	37,174

Net income per common unit—basic and diluted (3)	$			$			$			$			$
Net income per subordinated unit—basic and diluted (3)	$			$			$			$			$


	Three Months Ending								Twelve Months Ending June 30, 2018
	September 30, 2017		December 31, 2017		March 31, 2018		June 30, 2018		Twelve Months Ending June 30, 2018
	(in thousands, except per unit data)
Adjustments to reconcile net income to estimated Adjusted EBITDA:
Net income	$	8,629	$	9,589	$	8,792	$	10,164	$	37,174
Add:
Long-term incentive and equity compensation expense		2,250		375		375		375		3,375
Allocated general and administrative expenses		400		400		400		400		1,600
Interest expense, net		385		385		385		385		1,540
Depreciation and amortization		806		806		806		806		3,224

Estimated Adjusted EBITDA (4)	$	12,470	$	11,555	$	10,758	$	12,130	$	46,913

Adjustments to reconcile estimated Adjusted EBITDA to estimated cash available for distribution:
Less:
Cash interest expense, net (5)		250		251		250		250		1,001
Incremental external general and administrative expense (6)		400		400		400		400		1,600
Maintenance capital expenditures		22		22		23		23		90
Expansion capital expenditures (7)		—		—		—		—		—

Estimated cash available for distribution	$	11,798	$	10,882	$	10,085	$	11,457	$	44,222

Estimated minimum distributions:
Distributions to public common unitholders
Distributions to GPM and its affiliates—common units
Distributions to GPM and its affiliates—subordinated units
Distributions to the SteelPath Funds—common units
Distributions to Fuel USA and its affiliates—common units

Estimated total minimum distributions	$		$		$		$		$

Excess (shortfall) of estimated cash available for distribution over (below) aggregate minimum distributions	$		$		$		$		$

(1)	Includes phantom units that we expect will be granted in connection with this offering. Please read “Executive Compensation–Long-Term Incentive Plan.”

(2)	Interest income associated with the $78.0 million loan to be made to GPM in connection with this offering in exchange for a 30-year note bearing interest at a fixed annual rate of 8%.

(3)

As adjusted net income per limited partner unit is determined by dividing the as adjusted net income available to our common and subordinated unitholders by the number of common and subordinated units expected to be outstanding at the closing of the offering. For purposes of this calculation, we have assumed there will be common units and subordinated units outstanding.

4)	Adjusted EBITDA is defined and reconciled to its most directly comparable financial measures calculated and presented in accordance with GAAP in “Summary—Non-GAAP Financial Measures.”

(5)	Cash interest expense excludes the amortization of deferred financing costs associated with all debt.

(6)

Includes estimated incremental cash expenses associated with being a publicly traded partnership of approximately $1.6 million, including costs associated with SEC reporting requirements, tax return and Schedule K-1 preparation and distribution, independent auditor fees, investor relations activities, Sarbanes-Oxley Act compliance, stock exchange listing, registrar and transfer agent fees, incremental director and officer liability insurance and director compensation.

(7)

While we expect to have an active acquisition program, we are not projecting expansion capital expenditures for the forecast period as they are not necessary to support our ability to make the minimum quarterly distribution for the forecast period. To the extent we close acquisitions during the forecast period, we expect to fund such acquisitions through borrowings under our credit facility or cash from operations.

Significant Forecast Assumptions

The forecast has been prepared by and is the responsibility of our management. Our forecast reflects our judgment as of the date of this prospectus of the conditions we expect to exist and the course of action we expect to take during the forecast period. While the assumptions disclosed in this prospectus are not all-inclusive, the assumptions listed are those that we believe are significant to our forecasted results of operations. We believe we have a reasonable objective basis for these assumptions. We believe that our actual results of operations will approximate those reflected in our forecast, but we can give no assurance that our forecasted results will be achieved. There will likely be differences between our forecast and the actual results, and those differences could be material. If our forecast is not achieved, we may not be able to pay cash distributions on our common units at the minimum distribution rate or at all.

General Considerations and Risks

•

The volume of motor fuel delivered is the primary factor that will influence whether the amount of cash available for distribution for the twelve months ending June 30, 2018 is above or below our forecast.

•

Our total volume of fuel sold can be impacted by material changes to prices paid by consumers at the pump. While our overall and average per-store volumes have been relatively consistent over time (excluding the impact of acquisitions), significant increases in fuel prices or significant economic contraction in the areas in which we operate could materially and adversely impact the volumes of motor fuel we sell. A 10% increase or decline in our estimated volumes distributed to our customers on a pro rata basis for the twelve months ending June 30, 2018 would result in a corresponding increase or decline of approximately $4.1 million in Adjusted EBITDA and cash available for distribution for the forecast period, assuming motor fuel prices and all other variables are held constant.

•

Because our motor fuel distribution business is primarily a fee-based business, the overall level of motor fuel prices has a limited effect on our gross profit per gallon. The profit margin we earn on gallons we sell to GPM is fixed under the GPM Distribution Contracts and sales to sub-wholesalers, while the profit margin we earn on gallons sold to bulk purchasers can vary with the cost of fuel. We estimate that if our projected average motor

fuel cost of $1.63 per gallon (excluding excise taxes) for the twelve months ending June 30, 2018 increased or decreased by $0.10, this would have no impact on Adjusted EBITDA and cash available for the forecast period, assuming no changes to estimated volumes for the forecast period, due to the fact that this class of customer only represents 1.4 million gallons of our forecasted volume. Although we have not assumed any significant changes in volumes for purposes of this sensitivity analysis, we believe demand for motor fuel would decrease if there were a material increase in the price of motor fuel. Please read “Risk Factors—Risks Inherent in Our Business—Our financial condition and results of operations are influenced by changes in the prices of motor fuel, which may adversely impact our volumes, our customers’ financial condition and the availability of trade credit.”

•

The increase in gallons sold during the forecast period, as compared to the base period, is primarily a result of the full year impact of acquisitions that occurred in 2016 and the full year impact of the Roadrunner Acquisition that occurred in April 2017. Additionally we assumed an approximately 1% annual decrease in the base volume related to our results of operations for the three months ended March 31, 2017 and consumer demand.

Revenues and Gross Profit

We forecast that our total revenues and gross profit for the twelve months ending June 30, 2018, or the “forecast period,” will be $1.5 billion and $41.2 million, respectively, as compared to $1.1 billion and $32.7 million, respectively, on an as adjusted basis for the twelve months ended March 31, 2017, or the “base period.” We estimate that we will distribute 905.2 million gallons of motor fuel for the forecast period, as compared to 717.0 million gallons we distributed for the base period. We anticipate that the profit margin per gallon of motor fuel we distribute will be similar during the forecast period to the profit margin we would have earned on an as adjusted basis during the base period. Our revenue forecast is based primarily on the following assumptions:

Motor Fuel Revenues and Gross Profit

•

Revenues and Gross Profit from Fuel Sales to GPM. Based on our volume and cost per gallon estimates for the forecast period and our fixed profit margin on fuel sales to GPM under the GPM Distribution Contracts, we forecast that our motor fuel distribution revenues and gross profit from fuel sales to GPM will be $1.5 billion and $40.4 million, respectively, for the forecast period, as compared to $1.1 billion and $31.2 million, respectively, on an as adjusted basis for the base period.

•

Volumes to GPM. We estimate that we will distribute 898.9 million gallons of motor fuel to GPM during the forecast period, as compared to the 710.6 million gallons we distributed to GPM on an as adjusted basis for the base period. This volume estimate is based on the following assumptions: we will distribute motor fuel to GPM for GPM to sell at 897 controlled convenience stores, 76 independent and lessee dealers and 50 consignment locations during the forecast period, as compared to 805 convenience stores, 75 independent and lessee dealers and 51 consignment locations during the base period. We acquired a total of 187 locations during the fourth quarter of 2016 and 92 locations during the second quarter of 2017. In the base period, volumes are attributable to such acquisitions only for the portion of the period subsequent to the acquisition, and we have not given pro forma affect to such acquisitions in the base period.

•

Commodity Prices. We have assumed that our average weighted cost to purchase each gallon of motor fuel sold to GPM during the forecast period will be $1.59 per gallon, which is equal to our average cost of motor fuel sold to GPM for the first three months of 2017.

•

Profit Margin from Sales to GPM. Our profit margin on sales to GPM is fixed at 4.5 cents per gallon under the GPM Distribution Contracts. We have added the fixed profit margin set forth in the GPM Distribution Contracts to the average cost per gallon to calculate our assumed revenue per gallon of motor fuel sold. Because we receive a fixed fee for all volumes distributed to GPM, the overall level of motor fuel prices has no direct effect on our profit margin per gallon of motor fuel sold to GPM.

•

Revenues and Gross Profit from Fuel Sales to Sub-wholesalers and Bulk Purchasers. Based on our volume and cost estimates for the forecast period, we forecast that our motor fuel distribution revenues and gross profit from fuel sales to nine sub-wholesalers and bulk purchasers will be $10.1 million and $91,000, respectively, for the forecast period, as compared to $9.7 million and $63,000, respectively, on an as adjusted basis for the base period.

•

Volumes to Sub-wholesalers and Bulk Purchasers. We estimate that we will distribute 6.3 million gallons of motor fuel to sub-wholesalers and bulk purchasers during the forecast period, the same number of gallons we distributed to sub-wholesalers and bulk purchasers for the base period.

•

Commodity Prices. We have assumed that our average weighted cost to purchase each gallon of motor fuel sold to sub-wholesalers and bulk purchasers during the forecast period will be $1.59 per gallon, which is equal to our average cost of motor fuel sold to sub-wholesalers and bulk purchasers for the first three months of 2017.

•

Profit Margin from Sales to Sub-wholesalers and Bulk Purchasers. The profit margin we earn on gallons sold to our sub-wholesalers and bulk purchasers can vary with the cost of fuel. We have assumed that our profit margin per gallon of motor fuel sold to sub-wholesalers and bulk purchasers will be 1.4 cents per gallon for the forecast period, compared to 0.65 cents per gallon for the base period and consistent with our commodity price assumptions for the forecast period.

Other Income

•

We estimate that our other income will be composed of rental income from third parties of $0.3 million and other income of $0.4 million during the forecast period, which is the same as it would have been on an as adjusted basis during the base period.

Long-term Incentive and Equity Compensation Expenses

In connection with the closing of this offering, we expect that the board of directors of our general partner will approve grants under our LTIP of phantom units (i) equal in value to approximately $ million, in the aggregate, to our general partner’s officers ($ million of which will be granted to our general partner’s executive officers) and (ii) equal in value to approximately $ to our directors who are not employees or officers of our general partner. The phantom units granted to officers of our general partner and its affiliates will vest as follows: 25% will vest upon the closing of this offering and the remaining 75% will vest at the rate of 25% on each of the second, third and fourth anniversaries of the Formation Date. Phantom units will not contain any rights to receive distributions made with respect to our common units or distribution equivalent rights. Phantom units will be settled by the issuance of a common unit for each vested phantom unit on the earlier of (i) the officer’s termination of employment (to the extent the phantom units are vested) or (ii) January 12, 2020. Please read “Executive Compensation—Long-Term Incentive Plan.” For purposes of our forecast, we have assumed such grants have been approved and that no other phantom unit awards are granted during the period.

General and Administrative Expenses

We estimate that general and administrative (“G&A”) expenses for the forecast period will be approximately $2.1 million, compared to $2.0 million on an as adjusted basis for the base period. Our forecast reflects the approximately $1.6 million incremental G&A expenses that we expect to incur as a result of being a publicly traded partnership, including costs associated with SEC reporting requirements, tax return and Schedule K-1 preparation and distribution, independent auditor fees, investor relations activities, Sarbanes-Oxley Act compliance, stock exchange listing, registrar and transfer agent fees, incremental director and officer liability insurance and director compensation.

Depreciation and Amortization

We estimate that depreciation and amortization will remain at $3.2 million for the forecast period compared to the base period. Forecasted depreciation and amortization expense reflects management’s estimates, which are based on consistent average depreciable asset lives and depreciation methodologies, taking into account forecasted capital expenditures described below. We have assumed that the average depreciable asset lives are 30 years for buildings and seven years for equipment.

Capital Expenditures

We estimate that total capital expenditures for the forecast period will be approximately $90,000, the same as for the base period, primarily to maintain the six convenience store properties that we own and lease to third parties.

Interest Income—GPM Note

•

We estimate that we will receive $6.2 million during the forecast period based on a loan to the sponsor from the proceeds of this offering in the amount of $78.0 million at an interest rate of 8%.

Financing

We estimate that interest expense will be approximately $1.5 million for the forecast period as compared to $1.5 million for the base period. Our interest expense is based on the following financing assumptions:

•

$31.8 million remains invested in U.S. Treasuries that serves as collateral for the PNC Term Loan.

•

The PNC Term Loan that was contributed on January 12, 2016 at the amount of $32.4 million (as further described in Note 7 to our audited consolidated financial statements for the year ended December 31, 2016) remains outstanding. We have assumed an interest rate of 1.82% (Bloomberg forward projected LIBOR rate average by quarter September 30, 2017 through June 30, 2018 plus 50 basis points).

•

The unused portion of the $110.0 million revolving credit facility is subject to commitment fees of 0.375%.

•

Borrowings under our revolving credit facility will bear an average interest rate of 3.75%. This rate is based on a projected LIBOR rate as of June 30, 2017 plus 250 basis points. We forecast that we will have no borrowings outstanding under this facility during the forecast period.

Regulatory, Industry and Economic Factors

Our estimated results of operations for the forecast period are based on the following assumptions related to regulatory, industry and economic factors:

•

no material nonperformance or credit-related defaults by suppliers, GPM, dealers or our other customers;

•

no new federal, state or local regulation, or interpretation of existing regulation, of the portions of the motor fuels industry in which we operate that in either case will be materially adverse to our business or our customers’ or suppliers’ businesses;

•

no material adverse effects to our business, industry or our customers’ or suppliers’ businesses on account of natural disasters;

•

no material adverse change resulting from supply disruptions or reduced demand for motor fuels; and

•

no material adverse changes in market, regulatory and overall economic conditions.

Actual results could vary significantly from the foregoing assumptions. Please read “Risk Factors—Risks Inherent in Our Business—The assumptions underlying our forecast of cash available for distribution included in “Cash Distribution Policy and Restrictions on Distributions” are inherently uncertain and subject to significant business, economic, financial, regulatory and competitive risks and uncertainties that could cause cash available for distribution to differ materially from our estimates.”

HOW WE MAKE DISTRIBUTIONS TO OUR PARTNERS

General

Cash Distribution Policy

Our partnership agreement provides that our general partner will make a determination as to whether to make a distribution, but our partnership agreement does not require us to pay distributions at any time or in any amount. Instead, the board of directors of our general partner will adopt a cash distribution policy to be effective as of the closing of this offering that will set forth our general partner’s intention with respect to the distributions to be made to unitholders. Pursuant to our cash distribution policy, within 45 days after the end of each quarter, beginning with the quarter ending , 2017, we intend to distribute to the holders of common and subordinated units on a quarterly basis at least the minimum quarterly distribution of $ per unit, or $ on an annualized basis, to the extent we have sufficient cash after establishment of cash reserves and payment of fees and expenses, including payments to our general partner and its affiliates. We will prorate the distribution for the period after the closing of the offering through , 2017.

The board of directors of our general partner may change the foregoing distribution policy at any time and from time to time, and even if our cash distribution policy is not modified or revoked, the amount of distributions paid under our policy and the decision to make any distribution is determined by our general partner. Our partnership agreement does not contain a requirement for us to pay distributions to our unitholders, and there is no guarantee that we will pay the minimum quarterly distribution, or any distribution, on the units in any quarter. However, our partnership agreement does contain provisions intended to motivate our general partner to make steady, increasing and sustainable distributions over time.

Set forth below is a summary of the significant provisions of our partnership agreement that relate to cash distributions.

Operating Surplus and Capital Surplus

General

All cash distributed to unitholders will be characterized as being paid from either “operating surplus” or “capital surplus.” Distributions from operating surplus are made differently than cash distributions that we would make from capital surplus. Operating surplus distributions will be made to our unitholders and, if we make quarterly distributions above the first target distribution level described below, to the holder of our incentive distribution rights. We do not anticipate that we will make any distributions from capital surplus. In such an event, however, any capital surplus distribution would be made pro rata to all unitholders, but the holder of the incentive distribution rights would generally not participate in any capital surplus distributions with respect to those rights. Any distribution of capital surplus would result in a reduction of the minimum quarterly distribution and target distribution levels and, if we reduce the minimum quarterly distribution to zero and eliminate any unpaid arrearages, thereafter capital surplus would be distributed as if it were operating surplus and the incentive distribution rights would thereafter be entitled to participate in such distributions. Please read “—Distributions From Capital Surplus.”

Operating Surplus

We define operating surplus as:

•

$ million (as described below); plus

•

all of our cash receipts after the closing of this offering, excluding cash from interim capital transactions (as defined below), provided that cash receipts from the termination of any hedge contract prior to its stipulated settlement or termination date will be included in equal quarterly installments over the remaining scheduled life of such hedge contract had it not been terminated; plus

•

working capital borrowings or amounts available for working capital borrowings made after the end of a period but on or before the date of distribution of operating surplus for that period; plus

•

cash distributions paid on equity issued (including incremental distributions on incentive distribution rights), other than equity issued in this offering, to finance all or a portion of expansion capital expenditures in respect of the period from the date that we enter into a binding obligation to commence the construction, acquisition or improvement of a capital asset until the earlier to occur of the date the capital asset commences commercial service and the date that it is abandoned or disposed of; plus

•

cash distributions paid on equity issued (including incremental distributions on incentive distribution rights), other than equity issued in this offering, to pay the construction period interest on debt incurred, or to pay construction period distributions on equity issued, to finance the expansion capital expenditures referred to above, in each case, in respect of the period from the date that we enter into a binding obligation to commence the construction, acquisition or improvement of a capital asset until the earlier to occur of the date the capital asset is placed in service and the date that it is abandoned or disposed of; less

•

all of our operating expenditures (as defined below) after the closing of this offering; less

•

the amount of cash reserves established by our general partner to provide funds for future operating expenditures; less

•

all working capital borrowings not repaid within twelve months after having been incurred, or repaid within such twelve-month period with the proceeds of additional working capital borrowings; less

•

any cash loss realized on the disposition of an investment capital expenditure.

As described above, operating surplus does not reflect actual cash on hand that is available for distribution to our unitholders and is not limited to cash generated by our operations. For example, it includes a basket of $ million that will enable us, if we choose, to distribute as operating surplus up to that amount of cash we receive in the future from non-operating sources such as asset sales, issuances of securities and long-term borrowings that would otherwise be distributed as capital surplus. In addition, the effect of including certain cash distributions on equity interests in operating surplus, as described above, will be to increase operating surplus by the amount of any such cash distributions. As a result, we may also distribute as operating surplus up to that amount of cash that we receive from non-operating sources.

The proceeds of working capital borrowings increase operating surplus and repayments of working capital borrowings are generally operating expenditures, as described below, and thus reduce operating surplus when made. However, if a working capital borrowing is not repaid during the twelve-month period following the borrowing, it will be deemed repaid at the end of such period, thus decreasing operating surplus at such time. When such working capital borrowing is in fact repaid, it will be excluded from operating expenditures because operating surplus will have been previously reduced by the deemed repayment.

We define operating expenditures as all of our cash expenditures, including, but not limited to, taxes, reimbursement of expenses to our general partner or its affiliates, payments made in the ordinary course of business under interest rate hedge agreements or commodity hedge agreements (provided that (1) payments made in connection with the initial purchase of an interest rate hedge contract or a commodity hedge contract will be amortized over the life of the applicable interest rate hedge contract or commodity hedge contract and (2) payments made in connection with the termination of any interest rate hedge contract or commodity hedge contract prior to its stipulated settlement or termination date will be included in operating expenditures in equal quarterly installments over the remaining scheduled life of such contract), compensation of officers, directors and employees of our general partner, repayment of working capital borrowings, debt service payments and maintenance capital expenditures (as discussed in further detail below), provided that operating expenditures will not include:

•

repayment of working capital borrowings deducted from operating surplus pursuant to the penultimate bullet point of the definition of operating surplus above when such repayment actually occurs;

•

payments (including prepayments and prepayment penalties) of principal of and premium on indebtedness other than working capital borrowings;

•

expansion capital expenditures;

•

investment capital expenditures;

•

payment of transaction expenses relating to interim capital transactions;

•

distributions to our partners (including distributions in respect of our incentive distribution rights); or

•

repurchases of equity interests (other than repurchases to satisfy obligations under employee benefit plans) or reimbursements of our general partner for such purchases.

Interim Capital Transactions

We define cash from interim capital transactions to include proceeds from:

•

borrowings other than working capital borrowings;

•

sales of our equity and debt securities; and

•

sales or other dispositions of assets, other than inventory, accounts receivable and other assets sold in the ordinary course of business or assets sold or disposed of as part of normal retirement or replacement of assets.

Capital Surplus

Capital surplus is defined as any cash distributed in excess of our operating surplus. Although the cash proceeds from interim capital transactions do not increase operating surplus, all cash distributed from whatever source is deemed to be from operating surplus until cumulative cash distributed exceeds cumulative operating surplus. Thereafter, all cash distributed is deemed to be from capital surplus to the extent it continues to exceed cumulative operating surplus.

Characterization of Cash Distributions

Our partnership agreement provides that we treat all cash distributed by us as coming from operating surplus until the sum of all cash distributed since the closing of this offering equals the operating surplus from the closing of this offering through the end of the quarter immediately preceding that distribution. Our partnership agreement provides that we treat any amount distributed in excess of operating surplus, regardless of its source, as capital surplus. As described above, operating surplus includes a basket of $ million, and therefore does not reflect actual cash on hand that is available for distribution to our unitholders. Rather, this provision will enable us, if we choose, to distribute as operating surplus up to that amount of cash we receive in the future from interim capital transactions that would otherwise be distributed as capital surplus. We do not anticipate that we will make any distributions from capital surplus.

Capital Expenditures

Maintenance capital expenditures reduce operating surplus, but expansion capital expenditures and investment capital expenditures do not. Under our partnership agreement, maintenance capital expenditures are capital expenditures made to maintain our long-term operating income or operating capacity, while expansion capital expenditures are capital expenditures that we expect will increase our operating income or operating capacity over the long term. Examples of maintenance capital expenditures are those made to maintain existing contract volumes or renew existing distribution contracts or maintain our real estate leased to third party dealers in leasable condition. Maintenance capital expenditures will also include interest (and related fees) on debt incurred and distributions in respect of equity issued (including incremental distributions on incentive distribution rights), other than equity issued in this offering, to finance all or any portion of the construction or development of a replacement asset that are paid in respect of the period that begins when we enter into a binding obligation to commence construction or development of a replacement asset and ending on the earlier to occur of the date that such replacement asset commences commercial service and the date that it is abandoned or disposed of. Capital expenditures made solely for investment purposes will not be considered maintenance capital expenditures.

Expansion capital expenditures are capital expenditures made to increase our operating capacity over the long term. Examples of expansion capital expenditures include the acquisition of new properties or equipment, to the extent such capital expenditures are expected to expand our long-term operating capacity. Expansion capital expenditures will also include interest (and related fees) on debt incurred and distributions in respect of equity issued (including incremental distributions on incentive distribution rights) to finance all or any portion of the construction of a capital improvement paid in respect of the period that commences when we enter into a binding obligation to commence construction of a capital improvement and ending on the earlier to occur of the date such capital improvement commences commercial service and the date that it is disposed of or abandoned. Capital expenditures made solely for investment purposes will not be considered expansion capital expenditures.

Investment capital expenditures are those capital expenditures that are neither maintenance capital expenditures nor expansion capital expenditures. Investment capital expenditures largely will consist of capital expenditures made for investment purposes. Examples of investment capital expenditures include traditional capital expenditures for investment purposes, such as purchases of securities, as well as other capital expenditures that might be made in lieu of such traditional investment capital expenditures, such as the acquisition of a capital asset for investment purposes or the development of assets that are in excess of those needed for the maintenance of our existing operating capacity, but which are not expected to expand, for more than the short term, our operating capacity.

As described above, neither investment capital expenditures nor expansion capital expenditures are included in operating expenditures, and thus will not reduce operating surplus. Because expansion capital expenditures include interest payments (and related fees) on debt incurred to finance all or a portion of the construction, acquisition or development of a capital improvement during the period that begins when we enter into a binding obligation to commence construction, acquisition or development of a capital improvement and ending on the earlier to occur of the date such capital improvement commences commercial service and the date that it is abandoned or disposed of, such interest payments also do not reduce operating surplus. Losses on the disposition of an investment capital expenditure will reduce operating surplus when realized and cash receipts from an investment capital expenditure will be treated as a cash receipt for purposes of calculating operating surplus only to the extent the cash receipt is a return on principal.

Capital expenditures that are made in part for maintenance capital purposes, investment capital purposes and/or expansion capital purposes will be allocated as maintenance capital expenditures, investment capital expenditures or expansion capital expenditure by our general partner.

Subordination Period

General

Our partnership agreement provides that, during the subordination period (which we define below), the common units will have the right to receive distributions from operating surplus each quarter in an amount equal to $ per common unit, which amount is defined in our partnership agreement as the minimum quarterly distribution, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters, before any distributions from operating surplus may be made on the subordinated units. These units are deemed “subordinated” because for a period of time, referred to as the subordination period, the subordinated units will not be entitled to receive any distributions from operating surplus until the common units have received the minimum quarterly distribution plus any arrearages in the payment of the minimum quarterly distribution from prior quarters. Furthermore, no arrearages will be paid on the subordinated units. The practical effect of the subordinated units is to increase the likelihood that during the subordination period there will be sufficient cash from operating surplus to pay the minimum quarterly distribution on the common units. GPM will initially own, directly or indirectly, all of our subordinated units.

Determination of Subordination Period

Except as described below, the subordination period will begin on the closing date of this offering and expire on the first business day after a distribution to unitholders has been made in respect of any quarter, beginning with the quarter ending on or after , 2020, if each of the following has occurred:

•

distributions from operating surplus on each of the outstanding common and subordinated units equaled or exceeded the annualized minimum quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date;

•

the “adjusted operating surplus” (as defined below) generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common and subordinated units during those periods on a fully diluted, weighted-average basis; and

•

there are no arrearages in the payment of the minimum quarterly distribution on the common units.

Early Termination of Subordination Period

Notwithstanding the foregoing, the subordination period will automatically terminate on the first business day after a distribution to unitholders has been made in respect of any quarter, if each of the following has occurred:

•

distributions from operating surplus on each of the outstanding common and subordinated units exceeded $ (150.0% of the annualized minimum quarterly distribution) for the four-quarter period immediately preceding that date;

•

the “adjusted operating surplus” (as defined below) generated during the four-quarter period immediately preceding that date equaled or exceeded the sum of (i) $ (150.0% of the annualized minimum quarterly distribution) on all of the outstanding common and subordinated units during that period on a fully diluted, weighted-average basis and (ii) the distributions made on the incentive distribution rights; and

•

there are no arrearages in the payment of the minimum quarterly distribution on the common units.

In addition, if the unitholders remove our general partner other than for cause:

•

the subordinated units held by any person will immediately and automatically convert into common units on a one-for-one basis, provided (i) neither such person nor any of its affiliates voted any of its units in favor of the removal and (ii) such person is not an affiliate of the successor general partner; and

•

if all of the subordinated units convert pursuant to the foregoing, all cumulative common unit arrearages on the common units will be extinguished and the subordination period will end.

Effect of Expiration of the Subordination Period

When the subordination period ends, each outstanding subordinated unit will convert into one common unit and will then participate pro-rata with the other common units in distributions.

Adjusted Operating Surplus

Adjusted operating surplus is intended to reflect the cash generated from operations during a particular period and therefore excludes net changes in working capital borrowings and net changes in reserves of cash established in prior periods. Adjusted operating surplus consists of:

•

operating surplus generated with respect to that period (excluding any amount attributable to the item described in the first bullet point under “—Operating Surplus and Capital Surplus—Operating Surplus” above); less

•

any net increase in working capital borrowings with respect to that period; less

•

any net decrease in cash reserves for operating expenditures with respect to that period not relating to an operating expenditure made with respect to that period; plus

•

any net decrease in working capital borrowings with respect to that period; plus

•

any net increase in cash reserves for operating expenditures with respect to that period required by any debt instrument for the repayment of principal, interest or premium; plus

•

any net decrease made in subsequent periods in cash reserves for operating expenditures initially established with respect to such period to the extent such decrease results in a reduction of adjusted operating surplus in subsequent periods pursuant to the third bullet point above.

Distributions From Operating Surplus During the Subordination Period

Our partnership agreement requires that we make distributions from operating surplus for any quarter during the subordination period in the following manner:

•

first, to the common unitholders, pro rata, until we distribute for each common unit an amount equal to the minimum quarterly distribution for that quarter;

•

second, to the common unitholders, pro rata, until we distribute for each common unit an amount equal to any arrearages in payment of the minimum quarterly distribution on the common units for any prior quarters during the subordination period;

•

third, to the subordinated unitholders, pro rata, until we distribute for each subordinated unit an amount equal to the minimum quarterly distribution for that quarter; and

•

thereafter, in the manner described in “—Incentive Distribution Rights” below.

The preceding discussion is based on the assumption that we do not issue additional classes of equity interests.

Distributions From Operating Surplus After the Subordination Period

Our partnership agreement requires that we make distributions from operating surplus for any quarter after the subordination period in the following manner:

•

first, to the common unitholders, pro rata, until we distribute for each common unit an amount equal to the minimum quarterly distribution for that quarter; and

•

thereafter, in the manner described in “—Incentive Distribution Rights” below.

The preceding discussion is based on the assumption that we do not issue additional classes of equity interests.

General Partner Interest

Our general partner owns a 0.0% non-economic general partner interest in us, which does not entitle it to receive cash distributions. However, our general partner owns the incentive distribution rights and may in the future own common units or other equity interests in us, and will be entitled to receive distributions on such interests.

Incentive Distribution Rights

Incentive distribution rights represent the right to receive an increasing percentage (15.0%, 25.0% and 50.0%) of quarterly distributions of cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Upon the closing of this offering, our general partner will hold all of our incentive distribution rights, but may transfer these rights, subject to the restrictions set forth in the partnership agreement.

The following discussion assumes that there are no arrearages on the common units and that our general partner continues to own the incentive distribution rights.

If for any quarter:

•

we have distributed cash from operating surplus to the common and any subordinated unitholders in an amount equal to the minimum quarterly distribution; and

•

if such quarter is during the subordination period, we have distributed cash from operating surplus on outstanding common units in an amount necessary to eliminate any cumulative arrearages in the payment of the minimum quarterly distribution;

then we will make additional distributions from operating surplus for that quarter among the unitholders and our general partner (in its capacity as the holder of our incentive distribution rights) in the following manner:

•

first, to all unitholders, pro rata, until each unitholder receives a total of $ per unit for that quarter (the “first target distribution”);

•

second, 85.0% to all unitholders, pro rata, and 15.0% to our general partner (in its capacity as the holder of our incentive distribution rights), until each unitholder receives a total of $ per unit for that quarter (the “second target distribution”);

•

third, 75.0% to all unitholders, pro rata, and 25.0% to our general partner (in its capacity as the holder of our incentive distribution rights), until each unitholder receives a total of $ per unit for that quarter (the “third target distribution”); and

•

thereafter, 50.0% to all unitholders, pro rata, and 50.0% to our general partner (in its capacity as the holder of our incentive distribution rights).

Percentage Allocations of Distributions From Operating Surplus

The following table illustrates the percentage allocations of distributions from operating surplus between our unitholders and our general partner (in its capacity as the holder of our incentive distribution rights) based on the specified target distribution levels. The amounts set forth under “Marginal Percentage Interest in Distributions” are the percentage interests of our general partner (in its capacity as the holder of our incentive distribution rights) and our unitholders in any distributions from operating surplus we distribute up to and including the corresponding amount in the column “Total Quarterly Distribution Per Common Unit and Subordinated Unit.” The percentage interests shown for our unitholders and our general partner (in its capacity as the holder of our incentive distribution rights) for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth below for our general partner (in its capacity as the holder of our incentive distribution rights) assume that our general partner has not transferred its incentive distribution rights and that there are no arrearages on common units.

Total Quarterly Distribution Per
Common Unit and Subordinated Unit

Marginal Percentage
Interest in Distributions

Unitholders

General Partner (in
its Capacity as the
Holder of
Our Incentive
Distribution Rights)

Minimum Quarterly Distribution

—

First Target Distribution

above $

up to $

Second Target Distribution

above $

up to $

Third Target Distribution

above $

up to $

Thereafter

above $

Our General Partner’s Right to Reset Incentive Distribution Levels

Our general partner, as the initial holder of our incentive distribution rights, has the right under our partnership agreement to elect to relinquish the right to receive incentive distribution payments based on the initial target distribution levels and to reset, at higher levels, the minimum quarterly distribution amount and target distribution levels upon which the incentive distribution payments to our general partner would be based. If our general partner transfers all or a portion of our incentive distribution rights in the future, then the holder or holders of a majority of our incentive distribution rights will be entitled to exercise this right. The following discussion assumes that our general partner holds all of the incentive distribution rights at the time that a reset election is made. The right to reset the minimum quarterly distribution amount and the target distribution levels upon which the incentive distributions are based may be exercised, without approval of our unitholders or the conflicts committee of the board of directors of our general partner, at any time when there are no subordinated units outstanding and we have made cash distributions to the holders of the incentive distribution rights at the highest level of incentive distribution for each of the four most recently completed fiscal quarters (and the amount of each such distribution did not exceed adjusted operating surplus for such quarter). The reset minimum quarterly distribution amount and target distribution levels will be higher than the minimum quarterly distribution amount and the target distribution levels prior to the reset such that there will be no incentive distributions paid under the reset target distribution levels until cash distributions per unit following this event increase as described below. We anticipate that our general partner would exercise this reset right in order to facilitate acquisitions or internal growth projects that would otherwise not be sufficiently accretive to cash distributions per common unit, taking into account the existing levels of incentive distribution payments being made to our general partner.

In connection with the resetting of the minimum quarterly distribution amount and the target distribution levels and the corresponding relinquishment by our general partner of incentive distribution payments based on the target distributions prior to the reset, our general partner will be entitled to receive a number of newly issued common units based on a predetermined formula described below that takes into account the “cash parity” value of the average of the cash distributions related to the incentive distribution rights received by our general partner for the two quarters prior to the reset event as compared to the average of the cash distributions per common unit during this period.

The number of common units that our general partner would be entitled to receive from us in connection with a resetting of the minimum quarterly distribution amount and the target distribution levels then in effect would be equal to the quotient determined by dividing (x) the amount of cash distributions received by our general partner in respect of its incentive distribution

rights during the fiscal quarter ended immediately prior to the date of such reset election by (y) the cash distributed per common unit during such quarter.

Following a reset election, the minimum quarterly distribution amount will be reset to an amount equal to the cash distribution amount per common unit for the fiscal quarter immediately preceding the reset election (which amount we refer to as the “reset minimum quarterly distribution”) and the target distribution levels will be reset to be correspondingly higher such that we would make distributions from operating surplus for each quarter thereafter, after payment of the reset minimum quarterly distribution, as follows:

•

first, to all unitholders, pro rata, until each unitholder receives an amount per unit equal to 115.0% of the reset minimum quarterly distribution for that quarter;

•

second, 85.0% to all unitholders, pro rata, and 15.0% to our general partner (in its capacity as the holder of our incentive distribution rights), until each unitholder receives an amount per unit equal to 125.0% of the reset minimum quarterly distribution for the quarter;

•

third, 75.0% to all unitholders, pro rata, and 25.0% to our general partner (in its capacity as the holder of our incentive distribution rights), until each unitholder receives an amount per unit equal to 150.0% of the reset minimum quarterly distribution for the quarter; and

•

thereafter, 50.0% to all unitholders, pro rata, and 50.0% to our general partner (in its capacity as the holder of our incentive distribution rights).

The following table illustrates the percentage allocation of distributions from operating surplus between the unitholders and our general partner (in its capacity as the holder of our incentive distribution rights) at various cash distribution levels (1) pursuant to the cash distribution provisions of our partnership agreement in effect at the closing of this offering, as well as (2) following a hypothetical reset of the minimum quarterly distribution and target distribution levels based on the assumption that the quarterly cash distribution amount per common unit during the fiscal quarter immediately preceding the reset election was $ .


	Quarterly Distribution Per Unit Prior to Reset			Marginal Percentage Interest in Distributions						Quarterly Distribution Per Unit Following Hypothetical Reset
	Quarterly Distribution Per Unit Prior to Reset			Unitholders			General Partner (in its Capacity as the Holder of Our Incentive Distribution Rights)
Minimum Quarterly Distribution		$			100.0	%		—			$	(1)
First Target Distribution		above $	up to $		100.0	%		—			above $ (1)	up to $ (2)
Second Target Distribution		above $	up to $		85.0	%		15.0	%		above $ (2)	up to $ (3)
Third Target Distribution		above $	up to $		75.0	%		25.0	%		above $ (3)	up to $ (4)
Thereafter		above $			50.0	%		50.0	%		above $ (4)

(1)	This amount is equal to the hypothetical reset minimum quarterly distribution.

(2)	This amount is 115.0% of the hypothetical reset minimum quarterly distribution.

(3)	This amount is 125.0% of the hypothetical reset minimum quarterly distribution.

(4)	This amount is 150.0% of the hypothetical reset minimum quarterly distribution.

The following table illustrates the total amount of distributions from operating surplus that would be distributed to the unitholders and our general partner (in its capacity as the holder of our incentive distribution rights), based on the amount distributed for the quarter immediately prior to the reset. The table assumes that immediately prior to the reset there would be common units outstanding, and the quarterly cash distribution amount made per common unit for the fiscal quarter immediately preceding the reset would be $ .

Quarterly
Distribution Per
Unit Prior to Reset

Cash Distributions
to Common
Unitholders Prior to
Reset

Cash Distributions
to Our General
Partner (in Its
Capacity as the
Holder of Our
Incentive
Distribution Rights)
Prior to Reset

Total
Distributions

Minimum Quarterly Distribution

First Target Distribution

above $

up to $

Second Target Distribution

above $

up to $

Third Target Distribution

above $

up to $

Thereafter

above $

The following table illustrates the total amount of distributions from operating surplus that would be distributed to the unitholders and our general partner (in its capacity as the holder of our incentive distribution rights), with respect to the quarter in which the reset occurs. The table reflects that as a result of the reset there would be common units outstanding, and the distribution to each common unit would be $ . The number of common units to be issued to our general partner (in its capacity as the holder of our incentive distribution rights) upon the reset was calculated by dividing (1) the aggregate cash distribution received by our general partner (in its capacity as the holder of our incentive distribution rights) for the quarter immediately prior to the reset as shown in the table above, or $ , by (2) the cash distribution made on each common unit for the quarter immediately prior to the reset as shown in the table above, or $ .

Quarterly
Distribution Per Unit
Prior to Reset

Cash
Distributions
to Common
Unitholders
After Reset

Cash Distributions to Our
General
Partner After Reset

Total
Distributions

New
Common
Units

Incentive
Distribution
Rights

Total

Minimum Quarterly Distribution

First Target Distribution

above $

up to $

Second Target Distribution

above $

up to $

Third Target Distribution

above $

up to $

Thereafter

above $

Our general partner will be entitled to cause the minimum quarterly distribution amount and the target distribution levels to be reset on more than one occasion, provided that it may not make

a reset election except at a time when it has received incentive distributions for the prior four consecutive fiscal quarters based on the highest level of incentive distributions that it is entitled to receive under our partnership agreement.

Distributions From Capital Surplus

How Distributions From Capital Surplus Will Be Made

Our partnership agreement requires that we make distributions from capital surplus, if any, in the following manner:

•

first, to all unitholders, pro rata, until the minimum quarterly distribution level has been reduced to zero as described below;

•

second, to the common unitholders, pro rata, until we distribute for each common unit an amount from capital surplus equal to any unpaid arrearages in payment of the minimum quarterly distribution on the common units; and

•

thereafter, we will make all distributions from capital surplus as if they were from operating surplus.

The preceding paragraph assumes that we do not issue additional classes of equity interests.

Effect of a Distribution From Capital Surplus

Our partnership agreement treats a distribution of capital surplus as the repayment of the initial unit price from this initial public offering, which is a return of capital. The initial public offering price less any distributions of capital surplus per unit is referred to as the “unrecovered initial unit price.” Each time a distribution of capital surplus is made, the minimum quarterly distribution and the target distribution levels will be reduced in the same proportion that the distribution had to the fair market value of the common units immediately prior to the announcement of the distribution (or the average of the closing prices for the 20 consecutive trading days immediately prior to the ex-dividend date). Because distributions of capital surplus will reduce the minimum quarterly distribution and target distribution levels after any of these distributions are made, it may be easier for our general partner (in its capacity as the holder of our incentive distribution rights) to receive incentive distributions and for the subordinated units to convert into common units. However, any distribution of capital surplus before the unrecovered initial unit price is reduced to zero cannot be applied to the payment of the minimum quarterly distribution or any arrearages.

Once we distribute capital surplus on a unit issued in this offering in an amount equal to the initial unit price, our partnership agreement specifies that the minimum quarterly distribution and the target distribution levels will be reduced to zero. Our partnership agreement specifies that we will then make all future distributions from operating surplus, with 50.0% being paid to our unitholders and 50.0% to our general partner (in its capacity as the holder of our incentive distribution rights). This percentage interest for our general partner assumes that our general partner has not transferred the incentive distribution rights.

Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels

In addition to adjusting the minimum quarterly distribution and target distribution levels to reflect a distribution of capital surplus, if we combine our common units into fewer common units

or subdivide our common units into a greater number of common units, our partnership agreement specifies that the following items will be proportionately adjusted:

•

the minimum quarterly distribution;

•

the target distribution levels;

•

the unrecovered initial unit price;

•

the per unit amount of any outstanding arrearages in payment of the minimum quarterly distribution on the common units; and

•

the number of common units into which a subordinated unit is convertible.

For example, if a two-for-one split of the common units should occur, the minimum quarterly distribution, each target distribution level and the unrecovered initial unit price would be reduced to 50.0% of its initial level, and each subordinated unit would be convertible into two subordinated units. Our partnership agreement provides that we will not make any adjustment by reason of the issuance of additional units for cash or property.

In addition, if legislation is enacted or if existing law is modified or interpreted by a governmental taxing authority, so that we become taxable as a corporation or otherwise subject to taxation as an entity for federal, state or local income tax purposes, our partnership agreement specifies that the minimum quarterly distribution and the target distribution levels for each quarter may, in the sole discretion of the general partner, be reduced by multiplying each distribution level by a fraction, the numerator of which is cash available for distribution for that quarter (reduced by the amount of the estimated tax liability for such quarter) and the denominator of which is the sum of cash available for distribution for that quarter before any adjustment for estimated taxes. To the extent that the actual tax liability differs from the estimated tax liability for any quarter, the difference will be accounted for in subsequent quarters.

Distributions of Cash Upon Liquidation

General

If we dissolve in accordance with our partnership agreement, we will sell or otherwise dispose of our assets in a process called liquidation. We will first apply the proceeds of liquidation to the payment of our creditors. We will distribute any remaining proceeds to the unitholders and the holders of the incentive distribution rights, in accordance with their capital account balances, as adjusted to reflect any gain or loss upon the sale or other disposition of our assets in liquidation.

The allocations of gain and loss upon liquidation are intended, to the extent possible, to entitle the holders of common units to a preference over the holders of subordinated units upon our liquidation, to the extent required to permit common unitholders to receive their unrecovered initial unit price plus the minimum quarterly distribution for the quarter during which liquidation occurs plus any unpaid arrearages in payment of the minimum quarterly distribution on the common units. However, there may not be sufficient gain upon our liquidation to enable the common unitholders to fully recover all of these amounts, even though there may be cash available for distribution to the holders of subordinated units. Any further net gain recognized upon liquidation will be allocated in a manner that takes into account the incentive distribution rights.

Manner of Adjustments for Gain

The manner of the adjustment for gain is set forth in our partnership agreement. If our liquidation occurs before the end of the subordination period, we will generally allocate any gain to our partners in the following manner:

•

first, to the common unitholders, pro rata, until the capital account for each common unit is equal to the sum of: (1) the unrecovered initial unit price; (2) the unpaid amount of the minimum quarterly distribution for the quarter during which our liquidation occurs; and (3) any unpaid arrearages in payment of the minimum quarterly distribution;

•

second, to the subordinated unitholders, pro rata, until the capital account for each subordinated unit is equal to the sum of: (1) the unrecovered initial unit price; and (2) the unpaid amount of the minimum quarterly distribution for the quarter during which our liquidation occurs;

•

third, to all unitholders, pro rata, until we allocate under this paragraph an amount per unit equal to: (1) the excess of the first target distribution per unit over the minimum quarterly distribution per unit for each quarter of our existence; less (2) the cumulative amount per unit of any distributions from operating surplus in excess of the minimum quarterly distribution per unit that we distributed to the unitholders, pro rata, for each quarter of our existence;

•

fourth, 85.0% to all unitholders, pro rata, and 15.0% to our general partner (in its capacity as the holder of our incentive distribution rights), until we allocate under this paragraph an amount per unit equal to: (1) the excess of the second target distribution per unit over the first target distribution per unit for each quarter of our existence; less (2) the cumulative amount per unit of any distributions from operating surplus in excess of the first target distribution per unit that we distributed 85.0% to the unitholders, pro rata, and 15.0% to our general partner (in its capacity as the holder of our incentive distribution rights) for each quarter of our existence;

•

fifth, 75.0% to all unitholders, pro rata, and 25.0% to our general partner (in its capacity as the holder of our incentive distribution rights), until we allocate under this paragraph an amount per unit equal to: (1) the excess of the third target distribution per unit over the second target distribution per unit for each quarter of our existence; less (2) the cumulative amount per unit of any distributions from operating surplus in excess of the second target distribution per unit that we distributed 75.0% to the unitholders, pro rata, and 25.0% to our general partner (in its capacity as the holder of our incentive distribution rights) for each quarter of our existence; and

•

thereafter, 50.0% to all unitholders, pro rata, and 50.0% to our general partner (in its capacity as the holder of our incentive distribution rights).

If the liquidation occurs after the end of the subordination period, the distinction between common units and subordinated units will disappear, so that clause (3) of the first bullet point above and all of the second bullet point above will no longer be applicable.

We may make special allocations of gain among the partners in a manner to create economic uniformity among the common units into which the subordinated units convert and the common units held by public unitholders.

Manner of Adjustments for Losses

If our liquidation occurs before the end of the subordination period, we will generally allocate any loss to our unitholders in the following manner:

•

first, to holders of subordinated units, pro rata, until the capital accounts of the subordinated unitholders have been reduced to zero; and

•

thereafter, to the holders of common units, pro rata, until the capital accounts of the common unitholders have been reduced to zero.

If the liquidation occurs after the end of the subordination period, the distinction between common units and subordinated units will disappear, so that all of the first bullet point above will no longer be applicable.

We may make special allocations of loss among the partners in a manner to create economic uniformity among the common units into which the subordinated units convert and the common units held by public unitholders.

Adjustments to Capital Accounts

We will make adjustments to capital accounts upon the issuance of additional units. In doing so, we generally will allocate any unrealized and, for tax purposes, unrecognized gain resulting from the adjustments to the unitholders and the holders of our incentive distribution rights in the same manner as we allocate gain upon liquidation. By contrast to the allocations of gain, and except as provided above, we generally will allocate any unrealized and unrecognized loss resulting from the adjustments to capital accounts upon the issuance of additional units to the unitholders based on their percentage ownership of us. In this manner, prior to the end of the subordination period, we generally will allocate any such loss equally with respect to our common and subordinated units. In the event we make negative adjustments to the capital accounts as a result of such loss, future positive adjustments resulting from the issuance of additional units will be allocated in a manner designed to reverse the prior negative adjustments, and special allocations will be made upon liquidation in a manner that results, to the extent possible, in our unitholders’ capital account balances equaling the amounts they would have been if no earlier adjustments for loss had been made.

SELECTED HISTORICAL FINANCIAL AND OPERATING DATA

The following table shows selected historical financial and operating data of (i) GPM Investments, LLC, our predecessor for accounting purposes, for periods prior to January 1, 2016, and (ii) GPM Petroleum LP for any period subsequent to December 31, 2015. The selected historical financial data of our predecessor as of and for the year ended December 31, 2015 are derived from the audited consolidated financial statements of our predecessor appearing elsewhere in this prospectus. The selected historical financial data of GPM Petroleum LP as of and for the year ended December 31, 2016 are derived from the audited consolidated financial statements of GPM Petroleum LP appearing elsewhere in this prospectus. The selected historical financial data of GPM Petroleum LP as of and for the three months ended March 31, 2017 and 2016 are derived from the unaudited condensed consolidated financial statements of GPM Petroleum LP appearing elsewhere in this prospectus.

The following table should be read together with, and is qualified in its entirety by reference to, the historical consolidated financial statements and the accompanying notes appearing elsewhere in this prospectus. Among other things, the historical financial statements include more detailed information regarding the basis of presentation for the information in the following table. The table should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Use of Proceeds” and “Business—Our Relationship with GPM Investments, LLC.”


	GPM Petroleum LP						Predecessor
	Three Months Ended March 31,				Year Ended December 31, 2016		Year Ended December 31, 2015
	2017		2016		Year Ended December 31, 2016		Year Ended December 31, 2015
	(in thousands, except per gallon amounts)
Statement of Operations Data:
Revenues:
Fuel revenue—retail	$	—	$	—	$	—	$	1,155,777
Fuel revenue—wholesale		295,719		165,086		1,011,039		137,702
Merchandise revenue		—		—		—		645,328
Other revenue, net (1)		173		89		633		28,821

Total revenues		295,892		165,175		1,011,672		1,967,628
Gross profit:
Fuel gross profit—retail		—		—		—		98,950
Fuel gross profit—wholesale		8,114		5,865		29,774		6,829
Fuel gross profit—other		—		—		—		822
Merchandise gross profit		—		—		—		187,138
Other revenue, net (1)		173		89		633		28,821

Total gross profit		8,287		5,954		30,407		322,560
Operating expenses:
Store operating expense		—		—		—		243,399
General and administrative		151		132		461		31,014
Allocated general and administrative		388		355		1,498		—
Depreciation and amortization		806		278		2,349		20,010
Other expenses		—		—		—		3,730

Total operating expenses		1,345		765		4,308		298,153
Operating income		6,942		5,189		26,099		24,407
Interest expense, net		397		420		1,470		9,762

Net income before income taxes		6,545		4,769		24,629		14,645
Income tax expense		—		—		—		2,440

Net income	$	6,545	$	4,769	$	24,629	$	12,205
Other Financial Data:
Adjusted EBITDA (2)	$	8,136	$	5,822	$	29,946	$	48,677


	GPM Petroleum LP									Predecessor
	Three Months Ended March 31,						Year Ended December 31, 2016			Year Ended December 31, 2015
	2017			2016			Year Ended December 31, 2016			Year Ended December 31, 2015
	(in thousands, except per gallon amounts)
Operating Data:
Fuel gallons sold:
Retail		—			—			—			500,546
Wholesale		181,393			131,488			667,085			67,552

Total fuel gallons sold		181,393			131,488			667,085			568,098

Fuel gross profit, cents per gallon
Retail		—	¢		—	¢		—	¢		19.8	¢
Wholesale		4.5			4.5			4.5			10.1
Fuel gross profit cents per gallon		4.5			4.5			4.5			18.6



	GPM Petroleum LP						Predecessor
	As of March 31,				As of December 31, 2016		As of December 31, 2015
	2017		2016		As of December 31, 2016		As of December 31, 2015
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	1,893	$	4,645	$	7,410	$	7,649
Property and equipment, net		2,588		2,664		2,607		152,679
Intangibles, net		25,185		20,987		25,973		7,192
Total assets		99,003		89,494		106,708		407,464
Current and long-term debt, net		44,214		37,330		44,079		89,157
Accrued expenses and other current liabilities		5,162		5,701		5,849		37,127
Total long-term liabilities		44,380		37,491		44,243		137,731
Total liabilities		80,640		68,285		87,265		326,267
Total partners’/members’ equity		18,363		21,209		19,443		81,197

(1)

Other revenue primarily represents revenues derived from providing products and services where GPM acted as an agent and did not take ownership of items sold. Revenue generating activities include primarily lottery net revenues, ATM services, money order services and phone cards, while we and GPM each recognize rental income.

(2)	Adjusted EBITDA is defined in “Summary—Non-GAAP Financial Measures.”

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion analyzes the historical financial condition and results of operations of GPM Petroleum LP and GPM Investments, LLC, our predecessor for accounting purposes, and does not give effect to the completion of this offering and the application of proceeds from this offering. The financial data for the year ended December 31, 2016 discussed below takes into account the formation transactions effective as of January 12, 2016, as described under “Summary—Formation Transactions and Partnership Structure.” You should read the following discussion of the historical financial condition and results of operations in conjunction with the historical financial statements and accompanying notes of GPM Petroleum LP and our predecessor included elsewhere in this prospectus. This discussion includes forward-looking statements that are subject to risks and uncertainties that may result in actual results differing from statements we make. Please read “Forward-Looking Statements.” Factors that could cause actual results to differ include those risks and uncertainties that are discussed in “Risk Factors.”

Overview

We are a growth-oriented Delaware limited partnership formed by GPM to engage in the wholesale distribution of motor fuels on a fixed fee per gallon basis to GPM-controlled convenience stores and third parties. As of March 31, 2017, GPM, the seventh largest convenience store chain in the United States ranked by store count, controlled 805 convenience stores that sell motor fuel, merchandise, food, beverages and other products and services to retail customers in the Mid-Atlantic, Southeastern, Midwestern and Northeastern United States. GPM is obligated to purchase all of its motor fuel from us under 10-year wholesale motor fuel distribution agreements. For the three months ended March 31, 2017 and the year ended December 31, 2016, we distributed approximately 180.0 million and 660.8 million gallons of motor fuel, respectively, to GPM-controlled sites and 1.4 million and 6.3 million gallons of motor fuel, respectively, to third-party customers. We believe we are one of the largest independent motor fuel distributors by number of convenience stores in the United States, the largest distributor of Valero-branded motor fuel on the East Coast and the third largest distributor of Valero-branded motor fuel in the United States. In addition, we receive rental income from real estate that we own and lease to third parties. As described in more detail in “Summary—Formation Transactions and Partnership Structure” and “Summary—Our Relationship with GPM Investments, LLC—Our Agreements with GPM,” we commenced operations when we entered into our initial fuel distribution contracts in January 2016 and closed a $70.0 million private placement to the SteelPath Funds.

For the three months ended March 31, 2017, we had gross profit of approximately $8.3 million, net income of approximately $6.5 million and Adjusted EBITDA of approximately $8.1 million. For the year ended December 31, 2016, we had gross profit of approximately $30.4 million, net income of approximately $24.6 million and Adjusted EBITDA of approximately $29.9 million. Please read “Summary—Non-GAAP Financial Measures” for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our most directly comparable financial measures calculated and presented in accordance with GAAP.

Wholesale Motor Fuel Distribution

•

805 convenience stores controlled by GPM;

•

36 sites operated by independent dealers;

•

39 sites owned or leased by GPM and operated by lessee dealers; and

•

51 consignment locations where GPM sells motor fuel to retail customers.

In addition to the volumes of motor fuel we distribute to GPM, we also distribute motor fuel directly to nine sub-wholesalers and bulk purchasers. Sub-wholesalers, in turn, distribute fuel to fuel stations and convenience stores. Bulk purchasers primarily purchase motor fuel for their own use. For the three months ended March 31, 2017 and the year ended December 31, 2016, we distributed approximately 1.4 million and 6.3 million gallons of motor fuel to sub-wholesalers and bulk purchasers, respectively. GPM is obligated to provide us a right of first offer to purchase fuel distribution contracts for all convenience stores, dealer sites and consignment locations that GPM acquires in the future, as described in “Business—Our Agreements with GPM.”

We distribute BP, Conoco, Exxon, Marathon, Mobil, Phillips 66, Shell, Sunoco and Valero branded motor fuel, as well as, unbranded motor fuel. We believe the variety and large volumes of branded and unbranded motor fuel that we distribute is a key competitive advantage relative to other, smaller wholesale distributors in our markets. In addition to distributing motor fuel, we also distribute a limited quantity of kerosene.

Strategic Acquisitions

We are focused on strategic acquisitions, which have had and we expect will continue to have a significant impact on our reported results and can make period to period comparisons of results difficult. We anticipate growing our business by either purchasing the right to provide wholesale fuel to convenience stores acquired by GPM in the future or jointly consummating acquisitions with GPM, as well as by directly acquiring wholesale fuel businesses with existing dealer operations. Through GPM’s expansion, we plan to further develop our wholesale fuel distribution both within our existing area of operations and in new geographic areas.

We believe GPM has considerable opportunity to serve as a consolidator in our industry. According to NACS, as of March 1, 2017, there were 123,807 convenience stores with retail fuel sales in the U.S. Over 70% of these sites were owned by entities with fewer than 50 total sites. As GPM continues to make acquisitions, we plan to enter into wholesale fuel distribution contracts with those acquired sites.

Real Estate

In addition to revenues earned in our wholesale motor fuel distribution business, we also receive rental income from convenience store properties that we own and lease to third parties. We earned rental income from third parties with respect to six properties during 2016. Although we may purchase and lease convenience store properties to GPM or third parties, we do not currently operate or have any intention to operate any retail convenience stores that we own or may acquire in the future.

Our Predecessor—GPM Investments, LLC

GPM Investments, LLC is our predecessor for accounting purposes for any period prior to January 1, 2016. GPM is our parent and the owner of our general partner. Following the completion of this offering, we will continue to engage in wholesale distribution of fuel to GPM, independent dealers, consignment locations and sub-wholesalers, as well as lease or sublease certain convenience store properties to third parties. GPM will continue to operate its retail convenience store business.

Factors Impacting the Comparability of Our Financial Results

Our predecessor’s historical results of operations may not be comparable to our results of operations for the following reasons:

•

Revenues and Gross Profit. The gross profit in our predecessor’s historical consolidated financial statements relates to the profit margin received from fuel operations, both retail and wholesale, as well as merchandise revenue at GPM’s convenience stores. Profit margins for retail sales of fuel as well as merchandise will be retained by GPM following the completion of this offering. At consignment locations, our predecessor provided and controlled motor fuel inventory and price at the site and received the actual retail selling price for each gallon sold, less a commission paid to the independent operator of the location. As a result, the gross profit received from consignment locations by our predecessor varied in a similar manner to retail fuel margins per gallon, which are driven by changes in fuel prices, competitive dynamics of the market, and other factors. We distribute motor fuel on a wholesale basis pursuant to the GPM Distribution Contracts, pursuant to which we are the exclusive distributor of motor fuel purchased by GPM’s existing convenience stores and independently operated consignment locations at cost plus a fixed fee of 4.5 cents per gallon.

For the year ended December 31, 2015, our predecessor’s gross profit on fuel sales fluctuated. For the year ended December 31, 2016 and following this offering, we will derive a substantial majority of our gross profit from sales to GPM pursuant to the GPM Distribution Contracts. Under those contracts, we will earn a gross profit of 4.5 cents per gallon for volumes of fuel distributed to (i) GPM-controlled convenience stores, (ii) independent and lessee dealers and (iii) consignment locations, instead of the variable margins earned by our predecessor. For the year ended December 31, 2015, our predecessor earned average gross profit rates of 18.6 cents per gallon (including both retail and wholesale margins).

In addition, our predecessor generated approximately $645.3 million in merchandise revenue and $187.1 million in gross profit from merchandise revenue in its retail convenience store business for the year ended December 31, 2015, all of which is retained by GPM. We do not currently operate retail convenience stores. Therefore, our revenues will not include merchandise revenue.

•

Acquisitions. Acquisitions significantly affect our reported results and can make period to period comparisons of results difficult. As a consequence, we track our revenue and volume growth between periods both from existing and acquired businesses.

•

Roadrunner Acquisition. In April 2017, GPM purchased Mountain Empire Oil Company, the operator at such date of 92 convenience stores and gas stations located in Tennessee, Virginia, North Carolina and South Carolina (the “Roadrunner Acquisition”) as well as

11 sites and the Roadrunner office building. The consideration was approximately $28.0 million (subject to post-closing adjustments), of which $5.0 million was placed in escrow. Additionally, at the closing, a third-party real estate investment trust purchased directly from the Roadrunner sellers the ownership of 66 sites in consideration for approximately $139.0 million, paid directly to the Roadrunner sellers. Approximately $24.0 million of the consideration was financed through a loan from an affiliate, with the majority of the remaining amount financed through GPM’s line of credit. The acquired convenience stores sold approximately 100.0 million gallons of fuel in 2016.

•

Admiral Acquisition. In November 2016, GPM purchased Admiral Petroleum Company and its affiliates, which operated at such date (i) 137 convenience stores and (ii) 33 tobacco stores located in Indiana and Michigan (the “Admiral Acquisition”). The consideration paid at closing was $39.4 million for the 170 sites (subject to post-closing adjustments). $35.0 million of the consideration was financed by a loan from an affiliate, and the remainder was financed through GPM’s line of credit. The acquired convenience stores sold approximately 130.0 million gallons of fuel in 2016.

•

JiffiStop Acquisition. In October 2016, GPM purchased 17 convenience stores located in Illinois and Missouri from an unrelated third party (the “JiffiStop Acquisition”). The consideration paid was $7.9 million for the 17 sites. $7.0 million of the consideration was financed by our line of credit and the remainder was financed through GPM’s line of credit. The acquired convenience stores sold approximately 23.9 million gallons of fuel in 2016.

•

Fuel USA Acquisition. In March 2016, GPM purchased 62 convenience stores (42 company-operated stores and 20 dealer-operated stores) located in Virginia and Kentucky from an unrelated third party (the “Fuel USA Acquisition”). The consideration paid was $9.7 million for the 62 sites. The consideration was financed by GPM’s line of credit. In addition, in connection with the transaction, Fuel USA contributed its rights to supply fuel to the acquired stores to us in exchange for Class AQ Units with a value of approximately $16.9 million. The acquired convenience stores sold approximately 50.2 million gallons of fuel in 2016.

•

GasMart Acquisition. In February 2016, GPM purchased 15 convenience stores located in Illinois, Iowa and Nebraska from four unrelated third parties, who were in bankruptcy (the “GasMart Acquisition”). The consideration paid was $6.2 million for the 15 sites. $3.6 million of the consideration was financed by our line of credit and the remainder was financed through GPM’s line of credit. The acquired convenience stores sold approximately 7.4 million gallons of fuel in 2016.

•

Midwest Acquisition. In June 2015, GPM acquired 100% of the capital stock of WOC Southeast Holding Corp., which through its subsidiaries, operated 161 convenience stores as of June 3, 2015, 126 of which sell motor fuel, in Indiana, Ohio, Michigan and Illinois (the “Midwest Acquisition”). The consideration for the acquisition was approximately $58.0 million, which was financed, in part, through a combination of loans from affiliates of GPM of $20.0 million, a loan from the seller of $25.0 million and a term loan from PNC of $10.0 million.

•

Road Ranger Acquisition. In March 2015, GPM purchased 42 gas stations and convenience stores and one stand-alone quick service restaurant located in Illinois, Iowa and Kentucky from an unaffiliated third party (the “Road Ranger Acquisition”). The consideration paid for the acquisition was approximately $43.2 million. Loans from

affiliates were used to finance $30.0 million and the remainder was financed by GPM’s line of credit.

•

Carolinas Acquisition. In February 2015, GPM purchased eight convenience stores located in North Carolina and South Carolina from an unrelated third party (the “Carolinas Acquisition”). The consideration paid was $8.7 million. $8.0 million of the consideration was financed by a supplemental term loan to the PNC Term Loan and the remainder was financed through GPM’s line of credit.

•

Southeast Acquisition. In August 2013, GPM purchased (i) 263 convenience stores, 258 of which sell motor fuel, (ii) 33 fuel supply contracts for independently operated convenience stores and gas stations, and (iii) a fuel transportation business to certain of the company-operated and independently operated sites (which fuel transportation business was sold at the closing date) (the “Southeast Acquisition”), in North Carolina, South Carolina, Tennessee and Virginia from an unrelated third party.

•

Virginia Acquisition. In August 2013, GPM purchased five convenience stores located in Virginia (the “Virginia Acquisition”) from an unrelated third party.

•

Store Operating Expenses. Store operating expenses for our predecessor included primarily operating expenses associated with its retail convenience store operations including store labor costs, store occupancy, credit card fees, store insurance costs and other operating costs. Following the consummation of the Formation Transactions, our predecessor continued to operate the retail convenience stores and incur all related store operating expenses. Of these expenses, we have retained only routine maintenance and other facility costs associated with the six properties we own and lease to third parties of, which costs have been immaterial to date as reflected in our financial statements contained elsewhere in this prospectus.

•

General and Administrative Expenses. Our predecessor’s general and administrative expenses included non-store level management and operational costs associated with retail and wholesale motor fuel operations, as well as merchandise operations. GPM charges us a shared services allocation of existing predecessor management and accounting expenses for the management and operation of our wholesale distribution business. The allocated amounts were approximately $0.4 million and $1.5 million for the three months ended March 31, 2017 and the year ended December 31, 2016, respectively. Following the completion of this offering, GPM will charge us directly for incremental external general and administrative expenses associated with recurring costs of operating a publicly traded partnership such as costs associated with SEC reporting requirements, tax return and Schedule K-1 preparation and distribution, independent auditor fees, investor relations activities, Sarbanes-Oxley Act compliance, stock exchange listing, registrar and transfer agent fees, incremental director and officer liability insurance and director compensation. These charges will be approximately $1.6 million annually. These incremental costs associated with becoming a publicly traded partnership are not reflected in our predecessor’s or our financial statements.

•

Financing. There are differences in the way we will finance our operations going forward as compared to the way our predecessor financed its operations. Historically, our predecessor’s operations were financed as part of GPM’s integrated operations. We distribute to our unitholders most of the cash generated by our operations and expect this to continue following the closing of this offering. In connection with the closing of our Formation Transactions, we entered into a five year, $110.0 million revolving credit

facility. The revolving credit facility is available for general partnership purposes, including working capital (subject to a $15 million cap) and maintenance capital expenditures.

How We Evaluate and Assess Our Business

Our management uses a variety of financial measurements to analyze our performance. Key measures we use to evaluate and assess our business include the following:

•

Motor Fuel Gallons Sold. The primary driver of our business is the total volume of motor fuel sold. At March 31, 2017, 99.2% of our long-term fuel distribution contracts with our customers, including GPM, typically provide that we will distribute motor fuel at a fixed, volume-based fee. As a result, our gross profit is directly tied to the volume of motor fuel that we distribute.

•

Gross Profit Per Gallon. Pursuant to the GPM Distribution Contracts, we receive a fixed fee per gallon on all of the motor fuel we distribute to GPM, which GPM, in turn, distributes to its controlled convenience stores, independent and lessee dealers and consignment locations. Pursuant to the GPM Distribution Contracts, GPM arranges for motor fuel to be delivered from our suppliers to its independent and lessee dealers, with the costs being passed entirely along to GPM’s customers. We arrange for motor fuel to be delivered from our suppliers to GPM for sale to its controlled sites and consignment locations. Sub-wholesalers and bulk purchasers arrange for their own transportation. As a result, our cost to purchase fuel and any transportation costs that we incur are generally passed through to our customers, and therefore, do not have a substantial impact on our gross profit cents per gallon.

•

Fuel Gallon Growth. We are growth-oriented and will seek opportunities to obtain rights to distribute and supply additional fuel gallons. We generate a fixed profit on a substantial majority of the gallons of fuel sold and for this reason increasing the volume of fuel gallons we distribute is critical to our growth. Our fuel gallon growth is expected to be the result of strategic acquisitions of additional fuel supply agreements associated with GPM’s convenience store acquisitions, for which we have a right of first offer to purchase fuel distribution rights.

Market and Industry Trends and Outlook

We expect that certain trends and economic or industry-wide factors will continue to affect our business, both in the short-term and long-term. We have based our expectations described below on assumptions made by us and on the basis of information currently available to us. To the extent our underlying assumptions about or interpretation of available information prove to be incorrect, our actual results may vary materially from our expected results. Please read “Risk Factors” for additional information about the risks associated with purchasing our common units.

Industry Consolidation

According to NACS, as of March 1, 2017, there were 123,807 convenience stores with retail fuel sales in the U.S. Over 70% of these sites were owned by entities with fewer than 50 total sites. As independent dealers continue to experience pressure from increased competition from non-traditional fuel suppliers, such as Wal-Mart Stores, Inc., Costco Wholesale Corporation and grocery store chains, we intend to capitalize on the relationship between our wholesale business and GPM’s complementary retail business by jointly pursuing mixed asset acquisition opportunities

with GPM which may not be attractive to a pure wholesaler or pure retailer. Under the omnibus agreement, we expect to have the opportunity to participate with GPM in acquiring convenience store operations and related wholesale distribution businesses through (i) directly purchasing any dealer distribution contracts or other wholesale distribution contracts and assets owned by the acquisition target, and (ii) purchasing the right to sell additional fuel volumes to GPM for convenience stores that GPM acquires or for any acquired consignment locations. We believe these opportunities will provide for growth in our fuel volumes and potentially rental income.

Same Store Sales

In comparing our same store sales results we have experienced, and may in the future experience, a decrease in volume sold as a result of (i) GPM’s decision to close underperforming stores, (ii) the impact of increasing vehicle fuel efficiency requirements, (iii) increasing fuel prices causing lower consumer demand and (iv) competition. On an aggregate basis we expect to increase fuel volume by acquiring the right to supply additional convenience stores rather than investing significantly in existing locations.

Seasonality

Our business exhibits some seasonality due to our customers’ increasing demand for motor fuel during the late spring and summer months as compared to the fall and winter months. Travel, recreation and construction activities typically increase in these months in the geographic areas in which we operate, increasing the demand for motor fuel. Therefore, the volume of motor fuel that we distribute is typically somewhat higher in the second and third quarters of our fiscal year. Inclement weather, especially in the Midwest and Northeast regions of the United States during the winter months, can negatively impact the volume of motor fuel that we distribute. As a result, our results from operations may vary from period to period.

Future Fuel Price Expectations and Trends

Although commodity prices are variable, motor fuel is still inexpensive relative to recent years and consumers of motor fuel are benefiting from lower energy prices. When prices for motor fuels rise, some of our customers may have insufficient credit to purchase supply from us at their historical purchase volumes, and their customers, in turn, may reduce consumption, thereby reducing demand for product. When prices are increasing, we may be unable to fully pass on our additional costs to our customers, resulting in lower margins for us which could adversely affect our results of operations.

Historical Results of Operations

Overview

We have one reporting segment: wholesale. Our predecessor had two reporting segments: retail and wholesale. The retail segment consisted of fuel and merchandise revenue to retail consumers. The wholesale segment sold fuel to third-party dealers who represented the predecessor’s final customer and, in other arrangements, delivered fuel to third-party dealers on a consignment basis.

The financial and operating data discussed below includes the historical financial and operating data of (i) GPM Investments, LLC, our predecessor for accounting purposes, for periods prior to January 1, 2016, and (ii) GPM Petroleum LP for any period subsequent to December 31, 2015. The selected historical financial data of our predecessor as of and for the year ended December 31, 2015 are derived from the audited consolidated financial statements of our predecessor appearing elsewhere in this prospectus. The selected historical financial data of GPM

Petroleum LP as of and for the year ended December 31, 2016 are derived from the audited consolidated financial statements of GPM Petroleum LP appearing elsewhere in this prospectus. The selected historical financial data of GPM Petroleum LP as of and for the three months ended March 31, 2017 and 2016 are derived from the unaudited condensed consolidated financial statements of GPM Petroleum LP appearing elsewhere in this prospectus.

Fuel and Other Results

The following table presents revenue and gross profit results for our fuel business, which generates sales to both retail and wholesale customers:


	GPM Petroleum LP									Predecessor
	Three Months Ended March 31,						Year Ended December 31, 2016			Year Ended December 31, 2015
	2017			2016			Year Ended December 31, 2016			Year Ended December 31, 2015
	(in thousands, except per gallon amounts)
Revenues:
Fuel revenue—retail	$	—		$	—		$	—		$	1,155,777
Fuel revenue—wholesale		295,719			165,086			1,011,039			137,702

Total fuel revenue		295,719			165,086			1,011,039			1,293,479
Other revenue—retail		—			—			—			23,949
Other revenue—wholesale		—			—			—			3,505
Other revenue—other		173			89			633			1,367

Total other revenue		173			89			633			28,821

Total revenue	$	295,892		$	165,175		$	1,011,672		$	1,322,300


Gross profit:
Fuel gross profit—retail	$	—		$	—		$	—		$	98,950
Fuel gross profit—wholesale		8,114			5,865			29,774			6,829
Fuel gross profit—other (1)		—			—			—			822

Total fuel gross profit		8,114			5,865			29,774			106,601
Other revenue		173			89			633			28,821

Total gross profit	$	8,287		$	5,954		$	30,407		$	135,422

Operating data:
Fuel gallons sold—retail		—			—			—			500,546
Fuel gallons sold—wholesale		181,393			131,488			667,085			67,552

Total fuel gallons sold		181,393			131,488			667,085			568,098

Avg. selling price per gallon—retail	$	—		$	—		$	—		$	2.31
Avg. selling price per gallon—wholesale		1.63			1.26			1.52			2.04
Average selling price per gallon		1.63			1.26			1.52			2.28

Fuel gross profit, cents per gallon—retail		—	¢		—	¢		—	¢		19.8	¢
Fuel gross profit, cents per gallon—wholesale		4.5			4.5			4.5			10.1
Fuel gross profit, cents per gallon (2)		4.5			4.5			4.5			18.6

(1)

Fuel gross profit—other represents amortization of funds GPM received from fuel vendors for assistance with rebranding costs and other incentives which are received in cash and branding materials and recognized over the useful lives of such branding agreements. The payments are amortized and recognized as a reduction to fuel cost of revenues using the specific amortization periods based on the term of each agreement either using the straight-line method or based on fuel volume purchased.

(2)	Fuel gross profit cents per gallon excludes the impact of fuel gross profit—other which does not represent normal operating revenue.

Fuel Revenue

For the three months ended March 31, 2017, fuel revenue increased by $130.6 million, or 79.1%, to $295.7 million from $165.1 million for the comparable period in 2016. The GasMart Acquisition, Fuel USA Acquisition, JiffiStop Acquisition and Admiral Acquisition contributed an additional 49.9 million gallons sold. Additionally, a $0.37 per gallon increase in the average selling price of fuel in the first quarter of 2017 as compared to the prior period quarter contributed to increased fuel revenue. The majority of the increase in revenue was attributable to related-party sales for which the cost of fuel increased $0.41 per gallon, which was slightly offset during the prior period quarter by consignment sales to 38 related-party company operated sites. For these 38 sites, revenue and cost of sales included state excise tax. We discontinued these consignment sales on August 1, 2016.

During 2016, fuel revenue decreased $282.4 million, or 21.8%, to $1,011.0 million from $1,293.5 million for 2015. The decrease was primarily attributable to a $0.76 per gallon decrease in the average selling price of fuel as a result of a decrease in commodity prices. Additionally, 2015 fuel revenue included excise taxes whereas 2016 fuel revenue did not. This was partially offset by gallons contributed from the GasMart Acquisition, Fuel USA Acquisition, JiffiStop Acquisition and Admiral Acquisition of 126.5 million incremental gallons sold, and a full year of operations for the sites acquired in 2015.

Other Revenue. Other revenue primarily represents rental income. Other revenue for our predecessor primarily represents revenues derived from providing products and services where GPM acted as an agent and did not take ownership of items sold. Revenue generating activities include primarily lottery net revenues, ATM services, money order services, phone cards and rental income.

For the three months ended March 31, 2017, other revenue increased $84,000, or 94.4%, compared to the three months ended March 31, 2016 primarily related to increased discounts granted by state tax authorities for timely fuel tax filings.

Fuel Gross Profit

For the three months ended March 31, 2017, fuel gross profit increased by $2.2 million, or 38.3%, to $8.1 million from $5.9 million for the comparable period in 2016, primarily due to gross profit from the sites acquired in the GasMart Acquisition, Fuel USA Acquisition, JiffiStop Acquisition and Admiral Acquisition.

In 2016, fuel gross profit primarily represented gross profit earned on sales to GPM from the fixed fee of 4.5 cents per gallon sold.

In 2015, fuel gross profit primarily represented the full rack to retail gross margin realized by our predecessor.

Merchandise Results

We are not engaged in merchandise operations as reflected in our 2016 and 2017 results. The following table presents revenue and gross profit results of merchandise revenues and gross profit from our predecessor’s retail convenience stores, for 2015:


	GPM Petroleum LP						Predecessor
	Three Months Ended March 31,				Year Ended December 31,		Year Ended December 31,
	2017		2016		2016		2015
	(in thousands)
Revenues:
Merchandise revenue	$	—	$	—	$	—	$	645,328
Gross profit:
Merchandise gross profit		—		—		—		187,138

100

Operating Expenses

The following table presents operating expenses for the periods present:


	GPM Petroleum LP						Predecessor
	Three Months Ended March 31,				Year Ended December 31,		Year Ended December 31,
	2017		2016		2016		2015
	(in thousands)
Operating expenses:
Store operating expenses	$	—	$	—	$	—	$	243,399
General and administrative		151		132		461		31,014
Allocated general and administrative		388		355		1,498		—
Depreciation and amortization		806		278		2,349		20,010
Other expenses		—		—		—		3,730

Total operating expenses	$	1,345	$	765	$	4,308	$	298,153

For the three months ended March 31, 2017, operating expenses increased by $0.6 million over the comparable period in 2016 primarily due to additional amortization of intangible assets.

In 2016, total operating expenses were $4.3 million which consisted of $0.5 million in general and administrative expenses, $1.5 million in allocated general and administrative expenses and $2.3 million in depreciation and amortization expense.

In 2015, total operating expenses were $298.2 million which consisted of $243.4 million in store operating expenses, $31.0 million in general and administrative expenses, $20.0 million in depreciation and amortization expense and $3.7 million in other expenses.

Interest Expense

The following table presents interest expense for the periods presented:


	GPM Petroleum LP						Predecessor
	Three Months Ended March 31,				Year Ended December 31,		Year Ended December 31,
	2017		2016		2016		2015
	(in thousands)
Interest expense, net	$	397	$	420	$	1,470	$	9,762

Interest expense, net for the three months ended March 31, 2017 decreased by $0.02 million, or 5.5%, to $0.4 million primarily due to additional interest income earned on our investments.

Interest expense, net for 2016 represented interest on our line of credit and the $32.4 million term loan with PNC, partially offset by interest income earned on our investments.

Interest expense, net for 2015 primarily represented interest on bank and related-party debt.

101

Liquidity and Capital Resources

Cash Flows

Net cash provided by (used in) operating activities, investing activities and financing activities for the periods presented were as follows:


	GPM Petroleum LP									Predecessor
	Three Months Ended March 31,						Year Ended December 31, 2016			Year Ended December 31, 2015
	2017			2016			Year Ended December 31, 2016			Year Ended December 31, 2015
	(in thousands)
Net cash provided by (used in):
Operating activities	$	2,496		$	(759	)	$	25,424		$	43,933
Investing activities		—			(35,459	)		(42,459	)		(81,537	)
Financing activities		(8,013	)		40,862			24,444			41,559

Operating Activities

Cash flows provided by operations are our main source of liquidity. We have historically relied primarily on cash provided by operating activities, supplemented as necessary from time to time by borrowings on our credit facilities and other debt or equity transactions to finance our operations and to fund our capital expenditures. Cash flow provided by operating activities is primarily impacted by our net income and changes in working capital. Our accounts receivable, accounts payable and fuel inventory balances increase as the cost of fuel increases, and decline as the cost of fuel declines.

For the three months ended March 31, 2017, cash flows from operating activities increased by $3.3 million, to $2.5 million from a use of cash of $0.8 million for the comparable period in 2016. The 2017 increase was primarily the result of an increase in working capital mainly due to the day of the week in which the month ended which impacts the amount of billings to GPM.

GPM Petroleum LP S-1/A