A MERGER BET WEEN t wo of the top U.S. truck stop operators could keep an ailing chain from scaling back some sites at a time when cross-country truck drivers are finding fewer places to rest.
Flying J, the Ogden, Utah, travel plaza and fuel supply firm that has been operating under Chapter 11 bankruptcy protection since December, struck a merger deal that would sell its 250 truck stops and other assets to rival Pilot Travel Centers. The companies announced their tentative agreement just weeks before Flying J would face new funding deadlines that could cause it to idle some facilities.
“Failure to obtain financing could impair Flying J’s operations,” the company told the U. S. Bankruptcy Court for the District of Delaware.
The company said its core business is “fundamentally sound and profitable,” but plagued by a short-term financial squeeze caused by last year’s credit crunch and plunging fuel prices. It warned, however, that “idling of operations due to lack of financing would make Flying J’s assets undesirable not only to Pilot, but also to other potentially interested third parties.”
This comes as truckers are fighting to keep states from closing highway rest areas to take pressure off their revenue-starved budgets. That becomes a safety issue, because drivers become more fatigued if they cannot reach designated places to rest, eat or fuel up. And, because they must schedule stops around daily hours-of-service limits, rest area closures make it harder for drivers to plan trips.
The Owner-Operator Independent Drivers Association last week urged members to pressure Virginia to reverse a July 21 closure of 18 rest areas as a budget-cutting measure. “We also believe that U.S. lawmakers will help with federal funding in future legislation, but this will take time,” OOIDA said.
FLYING J VS. PILOT
FLYING J PILO T
Largest diesel retailer. Largest retail plaza operator. 250 travel centers. 300 locations.
43 U.S. states. 41 U.S. states.
6 Canadian provinces. 1 in Canada.
2008 sales: $18.5 billlion, all lines. 2008 sales: $16 billion.
Sources: Court filing, company Web sites, local reports
State-run rest areas also are closing in Indiana, Ohio, Vermont and New Hampshire, industry officials say, and more closures are possible.
States sometimes justify the closures partly by saying commercial travel plazas offer truckers a place to rest and refuel. However, many truck plazas and state rest areas are overflowing with trucks.
The deal involving Flying J’s sites would make Knoxville, Tenn.-based Pilot a much bigger company in the truck stop and fueling industry. Pilot already bills itself as the nation’s largest retail operator of the travel plazas that cater to freight-hauling trucks as well as to passenger cars along interstate highways and other major routes. It reportedly has 305 centers spread across 41 states, plus one in Canada, and had $16 billion in 2008 sales.
Flying J said it is the largest retail distributor of diesel fuel in North America, with its own fleet of supply trucks as well as oil production and pipeline assets. Its fueling plazas, plus truck service centers, motels and restaurants are in 43 states and six Canadian provinces. Counting all business lines, Flying J had 2008
sales of about $18.5 billion.
Some of those lines, including refineries and a pipeline Flying J is trying to sell separately, would not go to Pilot.
If the bankruptcy court agrees, Pilot would quickly inject $100 million into Flying J, and later pay a combination of equity plus up to $500 million in cash for the travel plazas, some adjacent lands, Flying J’s own fleet of trucks and its Ogden headquarters.
For now, reports say Pilot would keep the Flying J plazas open under the separate banner. That could change as a final deal is worked out, or as Pilot takes over, and adjusts a 550- site map into its business plans to avoid having redundant facilities near each other. JOC
Contact John D. Boyd at jboyd@joc.com.
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