Judge Mary F. Walrath of the Delaware District of U.S. Bankruptcy Court approved Thursday all parts of a motion that Flying J, the Ogden, Utah-based operator of travel centers, oil refineries, a pipeline and other operations, had requested as part of its bankruptcy reorganization.
The [image-nocss] motion included an arrangement in which Pilot would provide Flying J Inc. with $100 million in financing to help it emerge from bankruptcy, acquire Flying J's 250 travel centers, corporate headquarters, trucking fleet and other assets, offer Flying J an equity stake in Pilot plus $300 million to $500 million and other stipulations as the companies combine operations, the report said.
Thursday's hearing also included a request to file some details of the merger agreement under seal to keep some business information confidential, said the report.
David L. Eaton, attorney for Flying J, said the bankruptcy court's approval leaves only a few steps to be taken before a merger may take place.
Pilot and Flying J must complete due diligence on each other's assets and operations and talks must take place with ConocoPhillips, which is co-owner along with Flying J, in CFJ, a subsidiary that owns some of the travel centers Pilot would acquire, the newspaper added.
If Flying J Inc. and Pilot Travel Centers, with 305 locations across the country, complete their merger, the resulting company would be a multi-billion-dollar corporation headquartered in Knoxville with 550 travel centers in more than 40 states and Canada. It would be the largest retail travel center operator in North America and the largest retailer of diesel fuel, according to the report.
Approval of the deal with Pilot is the key to Flying J paying off its creditors and emerging from bankruptcy. "We believe, without guarantees, that this will pay Flying J creditors in full with substantial value left over for equity holders," Eaton told the court.
Though the court approval was a major step, Eaton said he could not estimate how long it might take before the companies can complete a merger. "I don't believe I want to go there," he told the paper after the hearing. "We just need for both parties to focus on finishing up what remains to be done."
The hearing, which took place in Delaware where Flying J is incorporated, went smoothly, said the News Sentinel, except for Comdata Corp., a creditor challenging Flying J's request that it be allowed to file a letter of intent under seal. This document details the merger plans with Pilot and Flying J, and the parties considered some of the letter of intent details to be proprietary business information.
Comdata filed an objection to the request to allow the letter of intent to be filed under seal. Comdata argued that concealing information on the agreement would make creditors unable to assess whether the information would have any impact on their interests in the case.
Colm Connolly, attorney for Comdata, noted that members of a creditors' committee had access to the sensitive information but Comdata did not. He cited a court ruling that it was unfair to share information with some but not all parties in a dispute. "We have a right to be treated equally as an interested party," Connolly said.
Eaton countered that Comdata is not trying to protect itself as a creditor but instead gain an advantage as a competitor and as a litigant. The only information it needs to assess the impact of the pre-merger agreement already is public knowledge, he said. "What has been discussed openly is that Pilot is providing $100 million for a DIP (debtor in possession) loan that is likely to pay everybody in full," Eaton said.
Walrath ruled that courts are able to seal such information when it is of a sensitive nature. "This does deal with aspects of the business in which Comdata is a competitor," she said.
Flying J is pursuing a lawsuit against Comdata, claiming it violates antitrust law with a point-of-sale automated system it markets to travel centers for handling truck fuel card transactions. Flying J is a 75% owner of TCH, which provides truck fuel cards and is a competitor of Comdata.
Eaton said that Pilot has agreed to honor the TCH cards at its travel centers.
No one representing Pilot spoke at Thursday's hearing, said the report, but Pilot issued a statement after the meeting that read, "Pilot is pleased with the proceedings and looks forward to working with Flying J to continue to provide excellent service to our customers."
Flying J Inc. operations are valued at $1.189 billion and the value of Pilot is $3.291 billion, according to documents filed with the bankruptcy court cited by the paper.
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