TravelCenters of America LLC (Nasdaq: TA), or TA, today announced it entered agreements with its principal landlord, Hospitality Properties Trust (Nasdaq: HPT), or HPT, under which TA has agreed to acquire certain travel center properties it currently leases from HPT, and to amend its existing leases with HPT. The transaction highlights are:
Andrew J. Rebholz, TA's Chief Executive Officer, made the following
statement:
“The agreements announced today are expected to benefit
TA in a number of ways. First, they will significantly reduce TA’s
rental expense and improve TA’s operating and financial leverage; TA’s
leverage ratio of 6.8x for the twelve months ended September 30, 2018
improves to 3.5x on a pro forma basis for this transaction. Second, they
will significantly increase TA’s potential net operating cash flows and
annual free cash flow. Third, they will provide TA with greater
financial flexibility. Fourth, they will increase the number of
unencumbered travel centers TA owns from 32 to 52. Finally, they will
address uncertainty surrounding the deferred rent obligation while
providing for a reduced amount to be paid.
“With the sale of the standalone convenience stores business concluded last month and the proceeds from that sale now committed to reduce TA’s leverage with the transaction announced today, TA can begin 2019 focused on our core travel center business and thoughtfully pursuing growth opportunities that include network expansion and TA’s industry leading truck service programs, while continuing to manage capital expenditures.”
The lease amendments also will increase the potential percentage rent payable by TA to HPT beginning in 2020 by an amount equal to 0.5% of the excess of nonfuel revenues at each leased site over the nonfuel revenues for 2019. Currently, percentage rent payable to HPT is determined as 3.0% of any increases in nonfuel revenues at each leased site over the applicable base year, which is 2015 for four of the leases (144 sites) and 2012 for one of the leases (35 sites) and the agreements do not change this calculation. For the twelve months ended September 30, 2018, TA’s total percentage rent payable to HPT for the 179 sites TA will continue to lease from HPT was $3.3 million.
The terms of the agreements between TA and HPT were negotiated and approved by special committees of TA’s Independent Directors and HPT’s Independent Trustees who were represented by separate counsel.
Conference Call:
On Thursday, January 17, 2019, at 10:00 a.m. Eastern time, TA will host a conference call to discuss these agreements. Following management's remarks, there will be a question and answer period. TA will also provide on Wednesday, January 16, 2019, at approximately 5:30 p.m. Eastern time, a presentation regarding the transaction that will be available at www.TA-Petro.com, under the Events & Presentations section of the Investors section of the website, and as an exhibit to a Current Report on Exhibit 8-K filed with the SEC.
The conference call telephone number is 877-329-4614. Participants calling from outside the United States and Canada should dial 412-317-5437. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available for about a week after the call. To hear the replay, dial 877-344-7529. The replay pass code is 10127808.
A live audio webcast of the conference call will also be available in a listen only mode on TA's website at www.ta-petro.com. To access the webcast, participants should visit TA's website about five minutes before the call. The archived webcast will be available for replay on TA's website for about one week after the call. The transcription, recording and retransmission in any way of this call or webcast is strictly prohibited without the prior written consent of TA. The Company's website is not incorporated as part of this press release.
About TravelCenters of America LLC:
TA's nationwide business includes travel centers located in 43 U.S. states and in Canada and standalone restaurants in 13 states. TA's travel centers operate under the "TravelCenters of America," "TA," "TA Express," "Petro Stopping Centers" and "Petro" brand names and offer diesel and gasoline fueling, restaurants, truck repair services, travel/convenience stores and other services designed to provide attractive and efficient travel experiences to professional drivers and other motorists. TA's standalone restaurants operate principally under the "Quaker Steak & Lube" brand name.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. WHENEVER TA USES WORDS SUCH AS "BELIEVE," "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "ESTIMATE," "WILL," "MAY" AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, TA IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON TA'S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY TA'S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. AMONG OTHERS, THE FORWARD LOOKING STATEMENTS THAT APPEAR IN THIS PRESS RELEASE THAT MAY NOT OCCUR INCLUDE:
THE INFORMATION CONTAINED IN TA'S PERIODIC REPORTS, INCLUDING TA'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2017, WHICH HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION, OR SEC, AND TA'S QUARTERLY REPORTS ON FORM 10-Q FOR THE PERIODS ENDED MARCH 31, 2018, JUNE 30, 2018 AND SEPTEMBER 30, 2018, WHICH HAVE BEEN FILED WITH THE SEC, UNDER THE CAPTION "RISK FACTORS," OR ELSEWHERE IN THOSE REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM TA'S FORWARD LOOKING STATEMENTS. TA'S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS. EXCEPT AS REQUIRED BY LAW, TA DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENT AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190116005846/en/
Katie Strohacker, Senior Director of Investor Relations
(617)
796-8251
www.ta-petro.com