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Flying J, Pilot to Shed Locations; Merger Still Waiting on FTC Approval

June 29, 2010

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Flying J and Pilot Travel Centers are gearing up to sell around 30 truckstop locations to Love's Travel Stops & Country Stores, in an effort to alleviate any concerns by the Federal Trade Commission that a potential merger would have anti-competitive effects
, a source familiar with the industry said.

Flying J filed for Chapter 11 bankruptcy protection in December 2008, and requested to merge with Pilot Travel Centers last year. Under the agreement, Flying J had to dismiss antitrust litigation against Pilot, while Pilot agreed to accept Flying J's TCH cards at locations owned by Pilot or leased and managed by Pilot, with the exception of its convenience stores.

While industry sources have told Truckinginfo.com that the merger deal is done, spokeswomen for Flying J and Pilot said the companies are still waiting on FTC approval.

However, many Flying J employees have been handed their 60-day notices of termination at the company's Ogden, Utah, headquarters, a sign a merger is near, according to a source.

Pilot will also be a 50 percent owner of Flying J's Ton Services, which was originally going to stay a separate entity. Ton Services provides access to pre-paid calling cards, load/equipment posting, freight matching, advertising services, truck insurance, and other driver related services. That means TCH fuel cards will also be part of Pilot.

Flying J recently reached an agreement with Comdata for its fuel cards to be accepted at more than 250 locations.

As Flying J waits for the green light from the FTC, the company has also been dealing with protests from James Graham, a man suing the company for selling him "hot fuel," according to a recent report by the Wall Street Journal. Graham objects to the company's exit strategy, arguing it allows Flying J to escape more than two dozen lawsuits, the Journal says.

"Hot fuel" involves expanded diesel fuel or gasoline that is sold at retail pumps at temperatures higher than the government standard of 60 degrees. That is the temperature/volume used in the petrochemical industry to measure petroleum liquids at the refinery and every point after the refinery, except at the retail pump. When expanded by higher temperatures, the same amount of fuel actually delivers less energy, according to automatic temperature compensation advocates.

Graham's lawyers believe the bankruptcy plan relieves Flying J of liability; they also feel the plan to pay creditors is misleading, leaving out hot fuel claimants, the Journal reports.

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