Gasoline, diesel and lubricant products distributor United Fuel & Energy has sold substantially all of the assets of its propane distribution business, excluding a $3.4 million portion of accounts receivable being retained by it, for an aggregate purchase price of approximately $9.8 million.

According to the company, the sale was closed on December 31, 2008. United Fuel is using the net cash proceeds from the sale of the assets of its propane distribution business to repay certain term loans and borrowings under its revolving credit facility.

United Fuel & Energy said that the transaction was completed for approximately $7.7 million in cash, plus $2.1 million in seller notes. It agreed to sell substantially all of the assets of its propane distribution business, excluding approximately $3.4 million in accounts receivable that were retained by it.

The assets were purchased by a business newly established by Thomas Kelly, the company’s vice chairman and a member of the company’s board of directors, and named Propane Direct Enterprises.

Frank Greinke, chairman and CEO of United Fuel & Energy, said: We are pleased to have completed the sale of this non-core business line . The propane business did not integrate well into our fuel distribution and card-lock operations and we felt that this was a good time to complete the transaction to streamline operations and strengthen our balance sheet.