John D. Boyd | Jul 15, 2009 4:31PM EDT
Flying J has a plan to come out of its Chapter 11 bankruptcy, but it means selling its core truck stop business to Pilot Travel Centers.
That would put about 250 travel plazas owned by Flying J, Ogden, Utah, in the hands of Knoxville, Tenn.-based Pilot under what the companies called a merger agreement.
Pilot already has 300 centers of its own in 41 states. It bills itself as the nation’s largest retail operator of the travel plazas that cater to freight-hauling trucks as well as passenger cars along Interstate highways and other major routes.
Flying J says it is the largest retail distributor of diesel fuel in North America, and has its own fleet of supply trucks as well as oil production and pipeline assets. Its fueling plazas, truck service centers, motels and restaurants are in 43 states and six Canadian provinces.
Its 2007 sales topped $16 billion, Flying J said, but with fuel prices plunging and credit markets disrupted in the wake of last year’s financial sector meltdown, it filed for bankruptcy protection in December to reorganize.
“A merger with Pilot represents the best possible outcome for Flying J, our creditors, our customers and our employees,” said Crystal Call Maggelet, Flying J’s chairman.
“Over the next few months, we will negotiate definitive agreements to merge our companies. This transaction will allow us to emerge from the bankruptcy process relatively quickly thereafter.”
This deal leaves out the refining and pipeline properties, which are separately up for sale, and focuses mainly on the Flying J travel centers, which according to some reports could number 270. Pilot would also acquire some adjacent excess lands, Flying J’s trucking operations and its corporate headquarters.
The bankruptcy court has to approve the plan, but under it Pilot would provide $100 million in debtor-in-possession financing for starters. Flying J said it had $28.5 million in cash on hand on July 10 and its “core operations continue to be profitable on a group-wide basis,” but said it could hit “significant liquidity constraints by September.”
When the asset sale deal closes, privately held Pilot would also pay between $300 million and $500 million plus an equity stake, according to court documents. Flying J said while there are no guarantees it expects with this plan to pay all creditors in full.
For now, Pilot would reportedly keep operating its new group of truck plazas under the Flying J brand, with headquarters in Knoxville, but the deal is still preliminary and various parts of it could change.
Contact John Boyd at jboyd@joc.com.
