Acquisitions

Agreement and Plan of Merger

On June 2, 2014, the Company and a wholly-owned indirect subsidiary entered into an agreement and plan of merger (the “Merger Agreement”) with Koko’oha Investments, Inc., a Hawaii corporation (“Koko’oha”). Koko’oha owns 100% of the outstanding membership interests of Mid Pac Petroleum, LLC, a Delaware limited liability company (“Mid Pac”), which is the exclusive licensee of the “76” brand in the state of Hawaii and the owner/operator of several terminals and retail gasoline stations across Hawaii. Pursuant to the Merger Agreement, the Company expects to acquire 100% of Koko’oha and Mid Pac for $107 million, less estimated long-term liabilities, plus estimated merchandise and product inventory, subject to other adjustments as set forth in the Merger Agreement.

The closing of the Merger Agreement is subject to certain conditions, including the expiration or termination of the applicable waiting period and any extensions thereof, under the Hart-Scott-Rodino Act (the "HSR Act") and certain other regulatory approvals. On July 30, 2014, the Company received a second request for information from the Federal Trade Commission.

In connection with and due upon signing the Merger Agreement, the Company funded a $10 million deposit against the purchase price, which was funded through proceeds from the Twelfth Amendment to the Tranche B Loan and is included in Other long-term assets on our unaudited condensed consolidated balance sheet. Please see Note 7—Debt for further information. We are obligated to deposit an additional $5 million against the purchase price within three days of the expiration of the waiting period under the HSR Act. If the Merger Agreement is terminated due to a breach of representations and obligations by us, we forfeit the deposits. If the Merger Agreement is terminated due to mutual consent, government order or closing does not occur within 120 days after the Merger Agreement was entered into, the deposits will be refunded to the Company. If the Merger Agreement is terminated due to Mid-Pac's breach of representations and warranties, the deposits will be returned to the Company and Mid-Pac will be obligated to pay us an additional $5 million if the termination occurs prior to the expiration or early termination of the waiting period under the HSR Act or $7.5 million if it occurs after.

Hawaii Independent Energy, LLC

On September 25, 2013, we completed the HIE Acquisition. We accounted for the acquisition of HIE as a business combination whereby the purchase price has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition.

We are continuing to evaluate certain liabilities assumed in the acquisition, including those related to employee benefits. We have recorded a preliminary estimate of the liability and expect to finalize the purchase price allocation during 2014.

During six months ended June 30, 2014, the purchase price allocation was adjusted to record a reduction to goodwill of $888 thousand and an increase to property and equipment related to the replacement of underground storage tanks at certain retail sites. The tank replacement work was performed by Tesoro Corporation in conjunction with the Environmental Agreement as discussed in Note 9—Commitments and Contingencies.

The unaudited pro forma financial information presented below assumes that the HIE acquisition occurred as of January 1, 2013 (in thousands):



	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013
Revenues	$	677,671		$	1,551,075
Net loss	$	(36,737	)	$	(43,187	)