Activist Win of the Day: TravelCenters Inks $400M Sale/Leaseback Deal With HPT

Jun 3 2015 | 1:42pm ET

In the latest sign that corporate boards are increasingly sensitive to activist investor demands, TravelCenters of America has signed a sale and leaseback deal with Hospitality Properties Trust (HPT) for 30 of its centers totaling approximately $397 million.

Activist hedge fund RDG Capital Management, led by former Carl Icahn lieutenant Russell Glass, publicly pushed for just such a step in an open letter to the company’s board back in February. The fund, which owns an undisclosed stake in TravelCenters, also argued for a spin-off of the company’s growing truck-repair business.

In contrast to many activist campaigns, Glass has characterized this effort as an “open discussion” with TravelCenters’ CEO Tom O’Brien. 

The deal sees Hospitality Properties expand its relationship with TravelCenters, which used to own the company, already owns & leases back 183 of the company’s locations, and is the company’s largest shareholder with an 8.9% stake. As part of the agreement, TravelCenters will buy from five travel centers now leased by TravelCenters from Hospitality Properties at a price of about $45 million and restructure existing leases with HPT for 144 locations. 

All told, the relatively complicated deal will produce cash proceeds of around $352 million for TravelCenters, before transaction costs, and result in gains on sales of approximately $137 million, according to a press release. 

“The agreements announced today represent the results of a lot of hard work that TA and HPT began to conceptualize almost one year ago,” said O’Brien. “I believe they represent clear wins for both companies. I also believe these agreements are strong evidence of TA’s success in creating value by buying and redeveloping travel centers.”

TravelCenters is the largest full-service travel center operator in the U.S. The company has 254 locations full-service locations in 43 states, primarily along major U.S. interstate highways, offering fuel, food, convenience stores, and in 240 of the locations, maintenance for heavy trucks.

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