Flying J Inc. and Pilot Travel Centers LLC plan to merge, the companies announced Tuesday, July 14, in a preliminary agreement. The plan provides a framework for Flying J’s core travel plaza business to emerge from Chapter 11 bankruptcy protection, according to a written statement from both companies.
Under the terms of the letter of intent filed Tuesday with the U.S. bankruptcy court in Delaware, the value indicated would allow all Flying J creditor obligations to be paid in full. Pilot also has agreed to provide $100 million in debtor-in-possession financing for Flying J’s operations, subject to court approval and various conditions.
“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,” says Crystal Call Maggelet, board chairman for Flying J, based in Ogden, Utah. “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 and to start a new chapter in the Flying J story.”
The preliminary merger agreement with Pilot pertains specifically to Flying J’s core travel plaza business; it excludes Longhorn Pipeline, Big West Oil, Flying J Oil & Gas, Haycock Petroleum and Transportation Alliance Bank. Flying J is evaluating and pursuing alternatives for each of these other businesses, according to company spokesman Peter Hill, of Kekst and Co.
Flying J filed for Chapter 11 protections on Dec. 22, 2008, after a drop in oil prices and disruption in the credit markets brought to bear significant short-term pressure on the company’s liquidity position.
“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,” says Jimmy Haslam, chief executive officer for Pilot, based in Knoxville, Tenn. “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.”