Paying Back 100%

Published in CSP Daily News

Additional details emerge on Flying J reorg: creditor payments, name change, subsidiaries

OGDEN, Utah -- "We have had to make some very difficult decisions over the past 18 months to maximize value and pay back our creditors," said Flying J CEO Crystal Maggelet, who late yesterday officially announced that the company's reorganization plan, which provides for the payment of its creditors in full in cash, plus interest, was confirmed by the U.S. Bankruptcy Court for the District of Delaware.

Since filing for Chapter 11 bankruptcy protection on Dec. 22, 2008, Flying J has pursued restructuring activities that have successfully improved the profitability of its [image-nocss] core businesses and has completed a merger of the company's retail operations with Pilot Travel Centers of Knoxville, Tenn., on June 30, 2010.

In addition, Flying J refinanced some of its debt and sold certain noncore assets, including Longhorn Pipeline, Flying J Oil and Gas, Haycock Petroleum and Big West of California. These efforts have enabled the company to operate much more efficiently as well as to repay in full the $1.4 billion owed its creditors. The distributions on allowed claims of the company's creditors are expected to commence before the end of July.

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"Like many companies in today's economy, this meant job loss for some employees, many of whom have been with us a very long time," said Magglet. "Impact on employees has been the most difficult part of the restructuring process. We are now poised for a bright future. Moreover, I am very happy that the Flying J brand will not just survive, but thrive into the future."

She added, "For a company with such a complex corporate structure, more than 15,000 employees and debts of this magnitude, emergence from bankruptcy is extremely difficult. Paying creditors 100% and preserving equity ownership of the company is a very rare occurrence. This extraordinary outcome is due in large part to the hard work of Flying J's dedicated staff and advisors, with strong support from its customers, suppliers, lenders, and business partners."

Post merger, the newly christened Pilot Flying J will continue to operate the Flying J locations under the Flying J brand. In an effort to reduce any potential confusion, Flying J Inc. will change its corporate name to FJ Management Inc.

FJ Management will continue to own and operate the Big West Oil refinery in North Salt Lake, Utah, and Transportation Alliance Bank (TAB), plus maintain an ownership stake in TCH Transportation Clearing House (TCH) and in the recently formed Pilot Flying J nationwide network of travel centers (11.7%).

The Big West North Salt Lake refinery was acquired in December 1985 with the purchase of the U.S. downstream assets of Husky Canada. The refinery, with a total capacity of 30,000 barrels per day, refines a combination of Utah, Wyoming and Canadian crude oils to produce primarily gasoline and diesel petroleum products for the mountain west market.

TAB was launched in October 1998, offering thousands of small carriers and drivers access to a financial institution that understands the trucking industry. Today, TAB provides credit- and debit-card solutions, accounts receivable financing, equipment lending and leasing, payroll applications, savings and investing options to thousands of small carriers and owner-operators. Currently, TAB has in excess of $500 million in assets.

TCH began operations in 1996 and currently provides fuel purchase and management solutions for its transportation carrier customer base through payment cards and products that are accepted at more than 7,500 truckstop locations in the United States and Canada. TCH uses cutting edge technology in money transfer and data processing in support of its product portfolio, which includes TCH Fleet Fuel Card, TCH Express, FP Solutions, SFJ Express, TCH Fleet MasterCard, TCH SmartPay, and TCH Checks and MoneyCodes.

Knoxville, Tenn.-based Pilot Flying J (PFJ) owns and operates a network of more than 550 interstate travel centers and travel plazas focused on serving professional drivers and traveling motorists. PFJ operates in 43 states and six Canadian provinces and employs more than 20,000 people. It is one of the top 10 largest privately held companies in the Untied States.

Flying J was represented in its bankruptcy case by Kirkland & Ellis as lead restructuring counsel and Young Conaway Stargatt & Taylor as Delaware counsel. The Blackstone Group acted as investment banker and Zolfo Cooper served as its restructuring advisor.