TravelCenters of America (NASDAQ: TA) pledged practically all of its assets to secure a $200 million loan to pay for CEO Jonathan Pertchik’s makeover of the business.
It is TA’s second major fundraising effort this year. It sold 6.1 million new shares in the company at $14.61 a share in July after cutting the price by about a third from the original asking price. TA raised about $80.1 million from the sale.
Buyers of those shares have done well. TA shares closed Monday up 3% at $32.98.
The seven-year loan has a 7% interest rate payable in quarterly payments equal to 1% of the principal annually. The balance would be due on the maturity date. TA can prepay the loan after two years at par.
Assets pledged
The loan is secured by a pledge of all the equity interests of “substantially all of TA’s wholly owned subsidiaries. Most other TA assets are on the line as well, according to a company press release issued after the markets closed Monday.
TA will use the proceeds for general business purposes. That includes funding of deferred capital expenditures, updates to key IT infrastructure, and growth initiatives in Pertchik’s transformation plan. Pertchik is a veteran turnaround expert hired as CEO a year ago this week.
“By closing this new loan, we have further strengthened our balance sheet and given ourselves increased flexibility in a dynamic capital environment,” he said.
Pertchik’s restructuring
Pertchik’s hired a new chief financial officer and executive vice presidents to oversee restaurants, gaming and convenience stores, corporate development, and information technology. The sweeping reorganization in May included cutting 130 corporate positions.
TA is pursuing franchisees to take over existing truck stops to grow the TA, Petro Stopping Centers and TA Express travel center brands. TA is focused on converting good-quality, well-located independent truck stops to the TA model, Pertchik told FreightWaves in a March interview.
Taking care with loan money
“As we look ahead to 2021, we have the people, the plan, the processes and now the liquidity to advance our transformation playbook,” he said in the press release.
TA is being careful with the loan money, Pertchik said. The travel center network operator has 270 locations in 44 states and Canada. It is managing through the pandemic with little certainty of what lies ahead.
TA has closed, reopened and closed dine-in restaurants in many states because of the pandemic. It laid off more than 3,000 employees in March. Business conditions allowed some to return.
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Art
They need better customer service. All their Gary truck stops are garbage!!!
Barb
Instead of buying more what’s wrong in fixing the ones you have. So many of your ta an petros are run down, the parking lots need repaved in general just refurbished. We need more sit down restaurants with healthy food and to be able to relax after running all day.
John
Typical TA stratagy. Focus “their” growth on buying out “existing” truck stops, that are often the last vestiges of the wonderful mom and pop places that really try to serve and treat drivers as the hard working people they are. And instead, tear them down and put in another generic cookie cutter fast food filled corporate truck stop and convert 1/2 the parking we got for free into $20+ a night paid parking. No real increase to the national number of parking places. Just INCREASED profits for TA. No…..i do not approve!!!
Dmitriy
TA must die! since the network does not receive sufficient care from its owners, they inflate the price of fuel relative to other small fuel traders in excess of the profit for their owners. for 50 cents per gallon of fuel, TA has crumbling buildings and parking lots. The truck repair service system does not have professional mechanics, only some dropouts and lazy people pulling money from the pockets of gullible drivers
Ooooo
He only cares about himself.
T
Absolutely…..and the 20.00 parking now for some TAs No free parking at some.
David Maring
If you ask me the TA and Petro brand should be sold to someone who knows what they are doing. For the last 10 to 15 years the quality of the food has deteriorated drastically. Everything is pre-made pre-measured and processed which is certainly very unhealthy specialist truck drivers who has to depend on the full service restaurant. We need somebody who knows the hospitality industry when it comes to the trucking industry. Quit favoring the locals the charter buses the vacationers start focusing on the truck drivers once and needs. A truck driver at the end of the day would like to have a nice hot meal and to sit at a table not fast food. If I had the money in the power I would certainly by ta and Petro and drop the t a name because it leaves an awful taste in a lot of drivers mouth
Ashley
I have noticed a steady decline, once TA bought Petro out.
Stephen Webster
Many truck stops and restaurants are struggling. The gov needs to provide back up loans to truck stops not to larger trucking companies and certain other businesses. We need the T A and petro maybe a few on all receivers and shippers who do not provide overnight parking to go to improve parking in the U S and Canada.
Nicholas Lopez
Truth
dennis brown
with this, mr petchik needs to really consider the health and preferences of americas REAL driving force and completely forego the conversion of the country pride and iron skillet restaurants into contracted operations from the likes of fudpuckers burgers, popeyes chicken, taco bell, ihop, black bear, quaker state restaurants with all of that UNHEALTHY (processed meat) food they bring in…NONE of those provide good healthy salads….so, KEEP THE FULL SERVICE RESTAURANTS AND RETURN THE SALAD BARS….THE REAL DRIVERS PREFER THE HEALTHY FARES UNLIOKE THE YOUNGSTERS THAT PREFER THE UNHEALTHY FASTFOOD….FOR THAT, LET THEM GO TO PILOT,OR LOVES where they have nothing but the fast food
G toj
COMPLETELY AGREE 👍 👏 🙌. I was LITERALLY ABOUT TO SAY THE SAME thing. Well said.
C. Elmoustapha
Good luck with that plead. The fat cats are in to fill up their puckets. Drivers who are the major driving force for their business are the least considered in the equation. The space in the sit-in restaurants makes more money when partitioned into more fast food stands.