High Velocity Alternative Energy on March 4 announced it had received an annual contract for $30 million to supply a major Midwestern distributor of lubricants, anti-freeze and solvents. The distributor supplies national auto parts stores, convenience stores, national retail chains and gas stations.
Were under a non-disclosure agreement with the contract, because were doing private label products for the distributor, High Velocity Chief Executive Officer Richard Carter told Lube Report. The most appealing thing is it takes us to a bit more national distribution because they distribute to really all over the Midwest and East Coast so it takes us out of our small Chicago market. Were in the process of adding a second shift to get up to speed for it right now. Were working on going to the West Coast now in the other direction, and theyre going to help us out with that as well.
Carter said the contract came about because of the companys goal to get out of being just a small regional player. A lot of our competition here in the Chicago area market has gone away, he said. Were not only maintaining that business, we also have bigger aspirations. We have got a couple of acquisitions in line right now that will be taking us to the West Coast and growing us pretty significantly.
High Velocity, which has been in existence since 2004, is a holding company that aims to acquire, merge and manage various business opportunities. Until 2004, it operated under the name Prelude Ventures Inc. High Velocity does business in the lubricants market primarily under the name of its wholly owned subsidiary, Petroleum Products Corp., which is housed in a 40,000-square-foot blending and packaging plant in Bedford Park, Ill, just outside of Chicago. There it blends, bottles and distributes private label motor oil, transmission fluids and related products for the automotive aftermarket. Bedford Park also serves as High Velocitys corporate headquarters.
Weve got a big tank farm, blending capabilities, three packaging lines right now, Carter said. We lease the property, but were under contract to purchase it. The Bedford Park plant was most recently operated by blender and packager Alliance Petroleum Corp. until that companys acquisition by High Velocity in 2004. In addition to work for major oil companies, Alliance Petroleum specialized in private label products for the automotive market, discount stores, food and farm industry.
On Feb. 25, High Velocity filed a Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of New York, along with the Petroleum Products subsidiary. According to Carter, the company will soon file for bankruptcy reorganization because of a disagreement with an East Coast lender over the amount of money High Velocity owed the lender.
They wouldnt talk about it, so the only way to get them back to the negotiating table was to get a U.S. bankruptcy trustee to do it, which theyve done, Carter said. Our business has never been better than it is right now. They were the only secured creditor we needed to deal with, but they wanted to try to convert – were publicly traded – into over 50 percent of ownership in our company. We werent willing to let that happen.