Business
Uncertainty surrounds the project after the selected developer exited following legal action and a media campaign by a rival bidder.
The company chosen to redevelop 18 aging highway service plazas across Massachusetts has backed out of the deal, leaving the project in limbo.
Irish-owned Applegreen announced Tuesday evening that it would not move forward with its agreement with MassDOT, citing concerns about the project’s viability.
The decision comes after competitor Global Partners, based in Waltham, launched a media campaign and filed a lawsuit claiming it could offer the state more and seeking to overturn the Board’s approval of Applegreen’s contract.
MassDOT’s Board of Directors awarded Applegreen the contract on June 18. However, in its statement, Applegreen said “costly and continued litigation threats” from Global Partners had put the project’s financing and timeline at risk.
“In light of these circumstances, Applegreen has terminated ongoing lease discussions,” the company said.
MassDOT sought proposals because leases for 14 of the 18 service plazas will expire Dec. 31.
The bid rival, Global Partners, operates the convenience store at all 11 service plazas along the Massachusetts Turnpike as a subtenant of McDonald’s. It manages fuel operations on behalf of Gulf as its agent.
The company took over four other MassDOT service plaza locations in 2017, after the prior operator went bankrupt.
The state says it hasn’t renovated the service plazas since the 1950s, and many now require major upgrades or complete rebuilding.
“This project has always been about delivering the best experience for the drivers and customers who use our service plazas,” said Transportation Secretary and CEO Monical Tibbits-Nutt in a statement.
Tibbits-Nutt says additional negotiations were expected between MassDOT and Applegreen to give taxpayers the best value.
“It is now clear that Applegreen is no longer the right partner to deliver on this project,” Tibbits-Nutt said. “Our focus is on moving forward to deliver the highest quality service plazas as quickly as possible for the people of Massachusetts.”
MassDOT did not answer questions about the timeline or whether it will restart the bidding process or go with Global Partners, the runner-up.
The state says Applegreen proposed the highest capital investment among the other bidders, $750 million, allowing it to rebuild nine plazas and renovate others.
The state added that Global projected its rent revenue to be $375 million more than Applegreen’s based on year one revenue over the life of the lease. However, Global offered $250 million less in capital investment.
Global Partners argued that it would grant the state $1.5 billion in rent payments, nearly $900 million more than Applegreen’s.
“Applegreen’s decision to walk away underscores the very concern raised for months: their proposal was never financially sound and never in the best interests of the Commonwealth,” said Eric Slifka, CEO and President of Global Partners, in a statement.
Slifka said Global Partners is ready to step in.
“We stand ready to move forward, honestly, transparently, and in the best interests of our Commonwealth,” he said.
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