Under the terms of the Letter of Intent filed today with the U.S. Bankruptcy Court in Delaware, the value indicated would allow all Flying J creditor obligations to be paid in full. Pilot has also 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," said Crystal Call Maggelet, Chairman of the Board of Flying J. "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."
Jimmy Haslam, CEO of Pilot, said, "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. 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."
The preliminary merger agreement with Pilot pertains specifically to Flying J's core travel plaza business, and it excludes Longhorn Pipeline, Big West Oil, Flying J Oil & Gas, Haycock Petroleum, and Transportation Alliance Bank. Flying J is in the process of pursuing or evaluating alternatives for each of these other businesses.
Flying J filed for Chapter 11 protection last December after a precipitous drop in oil prices and disruption in the credit markets.
Last fall, Marathon Oil sold its longtime 50 percent ownership in Pilot. CVC Capital Partners, a global private equity firm, stepped in and acquired a 47.5 percent interest in Pilot Travel Centers, forming an equal governance partnership with Pilot Corp., which is owned by the Haslam family.