Pilot to acquire Flying J's 250 travel centers

Associated Press • Jul 15, 2009 at 12:00 AM

KNOXVILLE, Tenn. (AP) -- Pilot Travel Centers LLC would acquire Flying J Inc.'s chain of 250 truck stops and travel plazas under a proposed cash and equity deal announced by the privately held companies on Tuesday.

The deal could lift the Ogden, Utah-based Flying J. from Chapter 11 bankruptcy protection, pay off its creditors and nearly double Knoxville-based Pilot's fleet of more than 300 truck stops and fast-food gas stations. Both companies operate in more than 40 states and Canada.

Court filings in U.S. Bankruptcy Court in Delaware outline a deal in which Pilot would acquire Flying J's nearly $1.2 billion travel plaza business for $300 million to $500 million in cash, plus equity in Pilot.

"We believe that by combining Flying J and Pilot we will better serve our customers by more efficiently providing them with the products and services they need," Pilot CEO Jimmy Haslam said in a statement.

"We look forward to working closely with Flying J and its employees during the Chapter 11 emergence process, and as we take the next steps of a new beginning for both of our companies."

In a letter of intent filed with the court Tuesday, Flying J described the "target assets" to be sold as its entire travel center operations, including "trucking operations, corporate headquarters building and operations, (and) certain excess land adjacent to operating travel plazas."

With exact terms for equity interest to be decided later, the filing places Pilot's value at $3.3 billion.

As part of the deal, Pilot also would provide $100 million in restructuring financing, including a revolving line of credit, allowing Flying J to continue running the travel plazas until the sale is closed.

Flying J applied for Chapter 11 protection Dec. 22 citing a drop in oil prices and the lack of available financing due to the disruption in credit markets.

The Utah company, which also owns pipeline and refinery holdings that are not part of the Pilot deal, has 15,000 employees and 2008 sales of more than $18 billion.

Pilot Travel Centers, which concentrates on travel centers, has 13,000 employees and 2008 revenues of $16 billion.

"After a careful and exhaustive review of the alternatives available, we have concluded that a merger with Pilot represents the best possible outcome for Flying J, our creditors, our customers and our employees," Flying J. Chairman Crystal Call Maggelet said in a statement.

Maggelet said the companies hope to negotiate definitive agreement over the next few months, allowing Flying J to emerge from the bankruptcy process "relatively quickly" and "to start a new chapter in the Flying J story."

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