TravelCenters of America Announces Intent to Acquire Quaker Steak & Lube®
A Casual Dining Chain with a Unique, Iconic Décor That Will Offer TravelCenters’s Customers Additional Food Choices
TA Uses Its Existing Expertise to Expand
TravelCenters of America LLC (NYSE: TA) has agreed to acquire Quaker Steak & Lube® casual dining restaurants and certain related assets, including existing restaurant operations, restaurant franchise program and bottled sauces for retail sale business, for $25 million.
Founded in 1974, Quaker Steak & Lube®, known for its “Best Wings USA”, iconic décor and original sauces, has over 50 locations, a majority of which are franchised, in 16 states, with a concentration in Pennsylvania and Ohio. TravelCenters intends to convert some of its existing full service restaurants to the Quaker Steak & Lube® brand while simultaneously expanding the franchise program and the number of stand alone company operated restaurants over time.
TravelCenters believes its expertise operating full service restaurants on a national scale which are consistently rated by customers as the #1 and #2 preferred truck stop restaurant brands provides TA with the ability to build Quaker Steak & Lube® into a nationally recognized brand and increase the profitability of its existing operations. The expected benefits from this transaction include:
- Expanding TravelCenters’ customer base to include additional traffic from four wheel motorists and local markets;
- Growing the profits at certain existing travel center restaurants; and
- Expanding the Quaker Steak & Lube® restaurant business into new markets.
“Quaker Steak & Lube®’s unique brand and award winning menu is a great fit for TA’s primary customers – professional truck drivers and highway motorists,” said TA’s chief executive officer Tom O’Brien. “We are confident that our existing food services operations will provide TA the tools it needs to make Quaker Steak & Lube® a nationally recognized restaurant brand. By converting some of our existing full service restaurants to the Quaker Steak & Lube® brand we will enhance the variety of food and hospitality options that our travel centers already provide to professional drivers at the same time that we expand the public awareness of the Quaker Steak & Lube® brand. We also expect to expand the Quaker Steak & Lube®’ existing franchise program as well as its business of operating company owned restaurants separate from our travel centers.”
Earlier today Quaker Steak & Lube® began proceedings for reorganization under Chapter 11 of the U.S. Bankruptcy Code and simultaneously filed in court the asset purchase and $2 million debtor in possession financing agreements with TA. Pursuant to the purchase agreement, TA has made a deposit toward the purchase price and has agreed to offer employment following the purchase to substantially all of Quaker Steak & Lube®’s current employees. The agreements are subject to bankruptcy court approval processes, which are expected to be completed in early 2016, and other conditions including, but not limited to, an auction process supervised by the bankruptcy court. The auction process is expected to be subject to certain rules regarding topping bids including, but not limited to, TA’s right, if TA’s purchase is not approved, to receive a refund of its deposit, a topping fee, expense reimbursements and repayment of the debtor in possession financing plus interest, and TA’s rights to assume or reject company leases at certain Quaker Steak & Lube® locations.
About TravelCenters of America LLC:
TA’s travel centers operate under the “TravelCenters of America”, “TA”, “Petro Stopping Centers” and “Petro” brand names. TA’s offers include diesel and gasoline fueling, restaurants, truck repair facilities, travel/convenience stores and other services which provide an efficient and enhanced travel experience. TA’s nationwide business includes travel centers located in 43 U.S. states and in Canada. TA convenience stores operate principally under the “Minit Mart” brand name in 11 states and offer gasoline fueling as well as non-fuel products and services such as coffee, groceries, fresh food offerings and other convenience items.
WARNING REGARDING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON TA'S CURRENT INTENT, BELIEFS AND EXPECTATIONS BUT THEY ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR VARIOUS REASONS. FOR EXAMPLE:
- THIS PRESS RELEASE STATES THAT TA HAS AGREED TO ACQUIRE QUAKER STEAK AND LUBE® CASUAL DINING RESTAURANTS AND CERTAIN RELATED ASSETS FOR $25 MILLION SUBJECT TO BANKRUPTCY COURT APPROVAL, WHICH IS EXPECTED IN EARLY 2016. THE REQUIRED COURT APPROVAL MAY NOT BE OBTAINED OR OTHER CONDITIONS MAY NOT BE SATISFIED AND THIS ACQUISITION MAY BE DELAYED, THE TERMS OF THIS ACQUISITION MAY BE MODIFIED OR THE ACQUISITION MAY NOT CLOSE.
- THIS PRESS RELEASE STATES THAT TA INTENDS TO CONVERT SOME OF ITS EXISTING FULL SERVICE RESTAURANTS TO THE QUAKER STEAK & LUBE® BRAND WHILE SIMULTANEOUSLY EXPANDING THE FRANCHISE PROGRAM AND STAND ALONE COMPANY OPERATED RESTAURANTS OVER TIME. AN IMPLICATION OF THIS STATEMENT MAY BE THAT THESE EXPANSION ACTIVITIES WILL INCREASE TA'S EARNINGS. THE ACQUISITION AND CONVERSION OF NEW BUSINESSES AND LOCATIONS INVOLVES RISKS OF FINANCIAL LOSSES. CHANGES OF OWNERSHIP FREQUENTLY RESULT IN PERSONNEL OR FRANCHISEE CHANGES AND IN REQUIREMENTS FOR NEW SUPPLY AND OTHER CONTRACT ARRANGEMENTS. THESE OR OTHER FACTORS MAY RESULT IN WEAKER FINANCIAL PERFORMANCE THAN EXPECTED OR FINANCIAL LOSSES. ALSO, MARKET CONDITIONS AFFECTING THE CASUAL DINING RESTAURANTS TA EXPECTS TO ACQUIRE MAY CHANGE IN A WAY WHICH MATERIALLY AND ADVERSELY IMPACTS THE BUSINESS OF THESE RESTAURANTS. PRESENTLY UNKNOWN PROPERTY CONDITIONS OR LIABILITIES MAY BE DISCOVERED AT THE RESTAURANTS TA EXPECTS TO ACQUIRE. ACCORDINGLY, MR. O'BRIEN AND TA CAN PROVIDE NO ASSURANCE THAT THIS ACQUISITION WILL INCREASE TA'S EARNINGS; RATHER THIS ACQUISITION MAY CAUSE TA TO INCUR LOSSES.
- THIS PRESS RELEASE STATES THAT TA BELIEVES ITS EXPERTISE OPERATING FULL SERVICE RESTAURANTS ON A NATIONAL SCALE CONSISTENTLY RATED BY CUSTOMERS AS THE #1 AND #2 PREFERRED TRUCK STOP RESTAURANT BRANDS WILL PROVIDE TA WITH THE ABILITY TO BUILD A NATIONALLY RECOGNIZED BRAND AND INCREASE THE PROFITABILITY OF THE QUAKER STEAK & LUBE® BUSINESS. IN FACT, TA MAY NOT HAVE THE EXPERTISE REQUIRED TO BUILD A NATIONALLY RECOGNIZED BRAND AND, AS A RESULT, MAY NOT INCREASE THE PROFITABILITY OF QUAKER STEAK & LUBE OR OTHERWISE BENEFIT TA.
- RESULTS THAT DIFFER FROM THOSE STATED OR IMPLIED BY TA'S FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE ALSO MAY BE CAUSED BY OTHER REASONS AS DESCRIBED IN TA'S PERIODIC REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, OR THE SEC, INCLUDING TA'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2014, AND TA'S QUARTERLY REPORTS ON FORMS 10-Q FOR THE PERIODS ENDING MARCH 31, JUNE 30 AND SEPTEMBER 30, 2015, IN SECTIONS OF THOSE REPORTS TITLED "WARNING REGARDING FORWARD LOOKING STATEMENTS" AND "RISK FACTORS" AND ELSEWHERE IN THOSE REPORTS. COPIES OF THOSE REPORTS ARE PUBLICLY AVAILABLE AT THE SEC'S WEBSITE: WWW.SEC.GOV.
INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE. EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW, TA DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
TravelCenters of America LLCKatie Strohacker, (617) 796-8251Senior Director, Investor Relations