Item 8.01 Other Events.
As previously disclosed, on February 15, 2023, TravelCenters of America Inc.
("TravelCenters") entered into an Agreement and Plan of Merger (the "merger
agreement") among TravelCenters, BP Products North America Inc., a Maryland
corporation ("BP"), and Bluestar RTM Inc., a Maryland corporation and an
indirect wholly-owned subsidiary of BP ("Merger Subsidiary"), pursuant to which
Merger Subsidiary will be merged with and into TravelCenters (the "merger"),
with TravelCenters surviving the merger. On April 3, 2023, TravelCenters filed a
definitive proxy statement (as supplemented by the Current Report on Form 8-K
filed with the SEC on April 24, 2023, the "Proxy Statement") with the Securities
and Exchange Commission (the "SEC") in connection with the merger.
The following disclosures (the "Supplemental Disclosures") supplement the
disclosures contained in the Proxy Statement. The Supplemental Disclosures will
not change the consideration to be paid to TravelCenters stockholders in
connection with the merger or the timing of the special meeting of TravelCenters
stockholders (the "special meeting") to be held virtually on May 10, 2023,
beginning at 9:30 a.m. Eastern Time. You may participate in the special meeting
via Internet webcast by visiting the following website and following the
registration and participation instructions contained therein:
https://www.viewproxy.com/TravelCentersofAmerica/2023. The TravelCenters board
of directors (the "TravelCenters Board") continues to unanimously recommend that
you vote "FOR" the proposals to be voted on at the special meeting described in
the Proxy Statement.
The Supplemental Disclosures should be read in conjunction with the disclosures
contained in the Proxy Statement, which in turn should be read in its entirety.
All page references are to the Proxy Statement and terms used below, unless
otherwise defined, shall have the meanings ascribed to such terms in the Proxy
Statement. Where a disclosure has been amended and restated in part, bold and
underlined text indicates language that has been inserted, and bold and
strikethrough text indicates language that has been deleted.
The disclosure in the section entitled "The Merger-Background of the Merger"
beginning on page 27 of the Proxy Statement, is hereby and amended as follows:
The paragraph beginning "On August 20, 2021, a subsidiary of TravelCenters and
BP" on page 27 is amended and supplemented as follows:
On August 20, 2021, a subsidiary of TravelCenters and BP entered into a
confidentiality agreement in connection with discussions about potential
commercial relationship opportunities. The confidentiality agreement did not
contain a standstill provision or a "don't ask, don't waive" provision.
The paragraph beginning "On April 21, 2022, BP and TravelCenters entered into"
on page 28 is amended and supplemented as follows:
On April 21, 2022, BP and TravelCenters entered into an amended and restated
confidentiality agreement, which included a standstill provision but did not
contain a "don't ask, don't waive" provision.
The paragraph beginning "On June 10, 2022, TravelCenters entered into a" on page
28 is amended and supplemented as follows:
On June 10, 2022, TravelCenters entered into a confidentiality agreement with
Party A, which included a standstill provision but did not contain a "don't ask,
don't waive" provision.
The paragraph beginning "On July 20, 2022, TravelCenters executed a second
amended" on page 29 is amended and supplemented as follows:
On July 20, 2022, TravelCenters executed a second amended and restated
confidentiality agreement with BP, which, among other things, added SVC and The
RMR Group LLC ("RMR") as parties. The amended and restated confidentiality
agreement contained a standstill provision but did not contain a "don't ask,
don't waive" provision.
The paragraph beginning "During the week of October 31, 2022, Citi contacted the
11 parties" on page 30 is amended and supplemented as follows:
During the week of October 31, 2022, Citi contacted the 11 parties authorized by
the TravelCenters Board and subsequently provided draft confidentiality
agreements to eight of the parties. Following negotiations, between November 9,
2022 and November 14, 2022, TravelCenters entered into confidentiality
agreements with Party D, a privately held international operator of gas stations
and convenience stores, Party E, a publicly traded international operator of gas
stations and convenience stores, and Party F, a subsidiary of an international
energy company, each of which had a standstill provision. None of these
confidentiality agreements contained a "don't ask, don't waive" provision. The
other parties contacted by Citi ultimately declined to sign a confidentiality
agreement and did not pursue an acquisition of TravelCenters.
The paragraph beginning "On February 15, 2023, following the approval by the
TravelCenters Board of the merger agreement," on page 34 is amended and
supplemented as follows:
On February 15, 2023, following the approval by the TravelCenters Board of the
merger agreement, the parties executed the merger agreement, the Consent and
Amendment Agreement, the voting agreements and the other documentation related
to the merger. No employment agreements with respect to the employment of
members of TravelCenters management after the closing were negotiated, or
entered into between BP and TravelCenters management.
The disclosure in the section entitled "The Merger-Opinion of Citigroup Global
Markets Inc." beginning on page 41 of the Proxy Statement, is hereby and amended
as follows:
The paragraph beginning "Citi conducted a discounted cash flow analysis"
starting on page 43 is amended and supplemented as follows:
Citi conducted a discounted cash flow analysis of TravelCenters using the
Management Forecast. Based on the Management Forecast, Citi calculated the
estimated present value of unlevered free cash flows that TravelCenters was
forecasted to generate during the fiscal years ending December 31, 2023 through
December 31, 2027 and both before and after taking into account the present
value (as of December 31, 2022) of cash tax savings resulting from net operating
loss, referred to as "NOL", carryforwards and U.S. federal tax credits expected
by TravelCenters management to be utilized during the forecast period.
Stock-based compensation was treated as a cash expense for purposes of the
discounted cash flow analysis to account for the entire cost of management
compensation. Citi also derived implied terminal values for TravelCenters by
applying an illustrative range of perpetuity growth rates of (1.0)% to 1.0%,
which range was selected by Citi based on its professional judgment and
experience, as well as based on observations of the long-term growth trends of
companies in the traditional grocery and C-store sectors with similar
characteristics to TravelCenters, to estimates of the unlevered free cash flows
that TravelCenters was expected to generate in the terminal year, which such
terminal year used EBITDA calculated assuming the average EBITDA margin in the
period beginning with the actual fiscal year ending December 31, 2022 and ending
with the forecasted fiscal year ending December 31, 2027 applied to forecasted
total revenue for forecasted fiscal year ending December 31, 2027, as advised by
TravelCenters Management as a long-term assumption for such EBITDA margin. The
unlevered free cash flows and the range of terminal values were then discounted
to present values reflecting implied enterprise values for Travelcenters, as of
December 31, 2022, using mid-year convention and discount rates ranging from
12.3% to 13.9%, reflecting estimates of TravelCenters's weighted average cost of
capital selected by Citi utilizing its professional judgment and experience, and
calculated using a weighted-average of the estimated cost of equity, based on
the observed equity beta of TravelCenters,and the after-tax cost of debt, based
on the observed cost of debt of TravelCenters's issued debt in each case,
assuming a range of target capital structures of TravelCenters. From the range
of implied enterprise values it derived for TravelCenters, Citi subtracted
TravelCenters's net debt of approximately $125 million as of December 31, 2022
(calculated as total debt, less cash and cash equivalents) to derive an equity
value for TravelCenters and subsequently divided such equity value by
TravelCenters's fully-diluted number of outstanding shares of TravelCenters
common stock of 15,101,389 as of February 15, 2023, resulting in an implied
share price.
The paragraph beginning "For purposes of its analysis, Citi separately valued,
as of December 31, 2022," on page 44 is amended and supplemented as follows:
For purposes of its analysis, Citi separately valued, as of December 31, 2022,
TravelCenters's (i) U.S. federal NOL carryforwards, and (ii) U.S. federal tax
credits, in each case, using estimates of tax cash savings resulting from (i)
and (ii) as provided by TravelCenters management for the fiscal years ending
December 31, 2023 to December 31, 2027 and taking into account a U.S. federal
corporate tax rate of 21%, as provided by TravelCenters management, and using a
perpetual tax credit utilization range for the forecast period of $0 million to
$1 million. All tax cash savings were then discounted to present value as of
December 31, 2022 utilizing discount rates ranging from 12.3% to 13.9%,
reflecting Citi estimates of TravelCenters's weighted average cost of capital
and subsequently divided by TravelCenters's fully-diluted number of outstanding
shares of TravelCenters common stock, resulting in an implied share price range
for the value of such cash tax savings of $3.85 to $4.20 per share of
TravelCenters common stock.
The following supplemental disclosure is added as a new paragraph following the
paragraph beginning "The results of this analysis indicated an implied share
range of" on page 45:
The selected public companies multiples were not provided to the TravelCenters
Board; instead, multiples were provided by Citi in aggregated form.
The paragraph beginning "Although none of the target companies in the
Traditional Grocery selected transactions are directly comparable to
TravelCenters" on page 45 is amended and supplemented as follows:
Although none of the target companies in the Traditional Grocery selected
transactions are directly comparable to TravelCenters and none of the
Traditional Grocery selected transactions are directly comparable to the
transactions contemplated by the merger agreement, the Traditional Grocery
selected transactions were chosen because they involved grocery stores with
financial, operational or business characteristics that, in Citi's view, based
on its professional judgment and experience, made them sufficiently comparable
to TravelCenters and/or the transaction contemplated by the merger agreement or
otherwise relevant for purposes of analysis. For each of the Traditional Grocery
selected transactions, Citi reviewed the enterprise value (as reported in public
filings and comprised of the value of the equity market capitalization and the
value of the debt less the value of the acquired cash and further adjusted as
relevant) of the selected transaction as a multiple of the relevant target
company's last twelve months EBITDA, referred to as "LTM EBITDA", as of the time
of the most recently completed fiscal quarter prior to the close of the
transaction. The Traditional Grocery selected transactions are set forth in the
table below.
The table titled "Traditional Grocery" on page 46 is amended and supplemented as
follows:
Announcement Acquiror Target Name Firm Value /LTM
Dates EBITDA
10/14/2022 Kroger Albertsons Companies, Inc. 6.0x
5/1/2021 Chedraui Smart & Final Stores 3.7
4/16/2019 Apollo Global Management Smart & Final Stores 5.9
The bullet point beginning "performed a selected transaction analysis for the
C-Store companies for selected transactions in the C-Store industry" on page 46
is amended and supplemented as follows:
· performed a selected transaction analysis for the C-Store companies for
selected transactions in the C-Store industry announced between 2018 and 2022,
a list of which is set forth in the table below:
Convenience Stores
Announcement Acquiror Target Name
Date
10/24/2022 GPM Investments, LLC Pride Convenience Holdings, LLC
9/12/2022 GPM Investments, LLC Transit Energy Group
9/28/2021 Casey's General Stores, Inc. Assets of Pilot Convenience
12/14/2020 Murphy USA, Inc. QuickChek Corp.
11/9/2020 Casey's General Stores, Inc. Buchanan Energy
9/4/2018 EG Group Minit Mart (TA)
2/5/2018 Euro Garages Kroger C-Stores
The analysis indicated a low and high range of enterprise value (as reported in
public filings and comprised of the value of the equity market capitalization
and the value of the debt less the value of the acquired cash and further
adjusted as relevant) of the C-Store selected transactions as a multiple of the
relevant target company's LTM EBITDA as of the time of the most recently
completed quarter prior to the close of the respective transaction of 7.1x to
13.7x, which further indicated an implied share price range of $148.12 to
$294.33 based on the application of the 7.1x to 13.7x to TravelCenters's
forecasted EBITDA for fiscal year ending December 31, 2023;
The bullet point beginning "performed an analysis of all-cash consideration
acquisition transactions" on page 46 is amended and supplemented as follows:
· performed an analysis of 51 all-cash consideration acquisition transactions
across all industries announced during the time period from January 1, 2018
through February 15, 2023 involving a U.S. public company as the target where
the disclosed enterprise values for such transactions were between $1.0 billion
and $2.0 billion as set out below, which indicated a 25th and 75th percentile
premiums of the price paid in these transactions relative to the target's last
undisturbed closing stock price prior to the announcement of the transaction of
19.6% and 69.2%, respectively, which further indicated an implied share price
range of $59.15 to $83.65 based on the application of the 25th and 75th
percentile premiums to the closing price per share of TravelCenters common
stock of $49.44 as of February 15, 2023; and
Ann. Date Target Acquiror
04/13/22 Sierra Oncology GlaxoSmithKline
08/09/19 Wesco Aircraft Holdings Pattonair
10/11/22 ForgeRock
Thoma Bravo
03/04/21 Five Prime Therapeutics Amgen
04/15/19 EFI Siris Capital Group
03/15/21 GenMark Diagnostics Roche Holding
05/16/18 Abaxis Zoetis
10/10/18 Imperva Thoma Bravo
06/21/21 Lydall Unifrax I
11/12/19 Continental Building Products Cie de Saint-Cobain
08/31/20 Aimmune Therapeutics
Nestle Health Science
11/11/18 Apptio Vista Equity
04/11/21 Luminex DiaSorin SpA
06/28/21 QAD Thoma Bravo
09/08/21 Kadmon Holdings Sanofi
11/06/19 Aircastle MM Air
10/18/18 Endocyte Novartis
12/24/18 MINDBODY Vista Equity
08/05/22 iRobot Amazon.com
11/11/19 Kemet Yageo Corp.
10/25/21 PAE Amentum Govt Svcs Hldg
02/05/18 8point3 Energy Partners CD Clean Energy
01/10/22 Apria
Owens & Minor
01/09/23 CinCor Pharma AstraZeneca Fin&Hldg
12/09/20 MTS Systems Amphenol
09/16/19 Alder BioPharmaceuticals Lundbeck
02/25/21 Pandion Therapeutics Merck & Co
05/10/18 Armo Biosciences Eli Lily & Co
01/19/22 Zogenix UCB
05/05/20 Portola Pharmaceuticals Alexion Pharmaceuticals
08/14/19 Presidio
BC Partners
09/10/21 Echo Global Logistics The Jordan Co
11/21/22 Imago BioSciences Merck Sharp & Dohme
12/18/18 Civitas Solutions Centerbridge Partners
04/30/19 WageWorks HealthEquity
08/30/18 K2M Group Holdings Stryker
05/17/19 Cray Hewlett Packard Enterprise
04/10/19 Global Brass & Copper Holdings Wieland-Werke
01/14/21 Atlantic Power
I Squared Capital Advisors
11/09/18 International Speedway NASCAR Holdings
12/23/19 Aquaventure Hldg
Culligan International Co
04/16/19 Smart & Final Stores Apollo Global Management
04/08/21 ORBCOMM GI Partners
10/16/19 Achillon Pharmaceuticals Alexion Pharmaceuticals
01/10/20 Dermira
Eli Lily & Co
02/16/21 Aegion Carter Intermediate
11/27/19 AVX KYOCERA Corp
08/08/19 Corindus Vascular Robotics Siemens Medical Solutions
12/07/20 SEACOR Holdings
American Industrial Partners
08/02/19 Navigant Consulting Guidehouse
01/31/23 Atlas Technical Consultants GI Partners LLC
The bullet point beginning "publicly available Wall Street research analysts'
price targets" on page 46 is amended and supplemented as follows:
· publicly available Wall Street research analysts' price targets for
TravelCenters, which indicated standalone price targets of $60.00 to $85.00 per
share of TravelCenters common stock based on three research analysts.
The paragraph beginning "Citi and its affiliates in the past have provided, and
currently provide, services to" on page 47 is amended and supplemented as
follows:
Citi and its affiliates in the past have provided, and currently provide,
services to TravelCenters unrelated to the merger for which services Citi and
such affiliates have received and expect to receive compensation, including,
without limitation, between January 1, 2021 and February 15, 2023, having acted
or acting as lender under TravelCenters's $200 million asset-backed lending
facility. Citi and its affiliates in the past have further provided, and
currently provide, services to RMR and certain entities (other than
TravelCenters) that are managed by or that receive business management services
from RMR unrelated to the proposed merger for which services Citi and such
affiliates have received and expect to receive compensation, including, without
limitation, between January 1, 2021 and February 15, 2023, having acted or
acting as: (i) financial advisor to certain entities managed by or that receive
business management services from RMR in connection with certain strategic
transactions, (ii) joint bookrunning manager for certain senior note offerings
of certain entities managed by or that receive business management services from
RMR, and (iii) lender under certain credit or securitization facilities of
certain entities managed by or that receive business management services from
RMR. Citi and its affiliates in the past have also provided, and currently
provide, services to BP and/or certain of its affiliates unrelated to the
proposed merger for which services Citi and such affiliates have received and
expect to receive compensation, including, without limitation, between January
1, 2021 and February 15, 2023, having acted or acting as: (i) underwriter on
BP's or its affiliates' (A) $2,000 million issuance of par-priced 2.721% 10-year
notes due 2032, in January 2022, (B) $1,450 million issuance of 3.060% 20-year
notes due 2041, in February 2021, (C) $1,250 million issuance of 3.379%
guaranteed notes due 2061, in February 2021, and (D) $550 million add-on
issuance of 3.379% guaranteed notes due 2061, in June 2021, (ii) lender in BP's
or its affiliates' (A) bilateral revolving credit facility, (B) syndicated
revolving credit facility, and (C) uncommitted facility as part of BP's
bilateral global trade program, and (iii) other various issuer services,
securities services, foreign exchange and interest rate hedging, commodity
business services as well as treasury and trade solutions, in each case, for
which affiliates of Citi recorded significant non-investment banking related
fees and other revenues as well as $3.2 million in investment banking fees over
the last two years.
The disclosure in the section entitled "The Merger- Certain Financial Forecasts"
beginning on page 47 of the Proxy Statement, is hereby and amended as follows:
The following supplemental disclosure is added as a new paragraph and table
following footnote 9 beginning "Noncash Rent Adjustments and" on page 49:
In addition, TravelCenters management provided the following unlevered free cash
flow numbers to Citi:
Period Ending December 31, Terminal
($ in millions) 2023E 2024E 2025E 2026E 2027E Year
Unlevered Free Cash Flow ($99) $165 $148 $103 $322 $240The disclosure in the section entitled "The Merger- Legal Proceedings Regarding
the Merger" beginning on page 58 of the Proxy Statement, is hereby and amended
is amended and restated in its entirety as follows:
Between March 24, 2023, and March 27May 5, 2023, two five complaints were filed
in the United States District Court for the Southern District of New York by
purported stockholders of TravelCenters:
· On March 24, 2023, a purported stockholder of TravelCenters named Ryan O'Dell
filed a complaint against TravelCenters and members of the TravelCenters Board
in the United States District Court for the Southern District of New York,
captioned O'Dell v. TravelCenters of America Inc., et al., Case No.
23-cv-02504.
· Also on March 24, 2023, a purported stockholder of TravelCenters named Elaine
Wang filed a complaint against TravelCenters and members of the TravelCenters
Board in the United States District Court for the Southern District of New
York, captioned Wang v. TravelCenters of America Inc., et al., Case No.
23-cv-02529.
· On April 14, 2023, a purported stockholder of TravelCenters named Jordan Wilson
filed a complaint against TravelCenters and members of the TravelCenters Board
in the United States District Court for the Southern District of New York,
captioned Wilson v. TravelCenters of America Inc., et al., Case No.
23-cv-03112.
· On April 19, 2023, a purported stockholder of TravelCenters named Howard
Longman filed a complaint against TravelCenters and members of the
TravelCenters Board in the United States District Court for the Southern
District of New York, captioned Longman v. TravelCenters of America Inc., et
al., Case No. 23-cv-03235.
· On April 24, 2023, a purported stockholder of TravelCenters named Meyer
Halberstam filed a complaint against TravelCenters and members of the
TravelCenters Board in the United States District Court for the Southern
District of New York, captioned Halberstam v. TravelCenters of America Inc., et
al., Case No. 23-cv-03426.
The two five complaints filed in the above-referenced actions allege, among
other things, that the defendants violated Sections 14(a) and 20(a) of the
Securities Exchange Act of 1934, by omitting or misrepresenting certain
allegedly material information from the Schedule 14A filed in connection with
the merger. Those complaints allege that such omissions and misrepresentations
rendered the Schedule 14A false and misleading. We refer to the above-referenced
actions collectively as the "Proxy Litigation."
As of March 31 May 5, 2023, TravelCenters had also received two eleven
stockholder demand letters, which assert that certain information allegedly
omitted from the Schedule 14A should be disclosed.
TravelCenters believes the allegations and claims asserted in the Proxy
Litigation and the stockholder demand letter are without merit. TravelCenters
denies that it has violated any laws or that TravelCenters or any member of the
TravelCenters Board breached any duties to the TravelCenters Stockholders.
Cautionary Statement Regarding Forward-Looking Statements
This communication and any documents to which we refer you in this
communication, contains statements that constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 and
other securities laws. Whenever we use words such as "believe," "expect,"
"anticipate," "intend," "plan," "estimate," "will," "may" and negatives and
derivatives of these or similar expressions, we are making forward-looking
statements. These forward-looking statements are based upon our present intent,
beliefs or expectations, but forward-looking statements are not guaranteed to
occur and may not occur. Actual results may differ materially from those
contained in or implied by our forward-looking statements. Forward-looking
statements involve known and unknown risks, uncertainties and other factors,
some of which are beyond our control. These risks and uncertainties include, but
are not limited to, the risks detailed in our filings with the SEC, including in
our most recent filing on Form 10-K and subsequent periodic and interim reports,
factors and matters described or incorporated by reference in this proxy
statement, and the following factors: (a) the expected timing and likelihood of
completion of the merger; (b) the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger agreement,
including a termination of the merger agreement under circumstances that could
require us to pay a termination fee; (c) the possibility that TravelCenters's
stockholders may not approve the proposal to approve the merger; (d) the risk
that the parties may not be able to satisfy the conditions to the closing of the
merger, including required regulatory approvals, in a timely manner or at all;
(e) the failure of the merger to close for any other reason; (f) risks related
to disruption of management time from ongoing business operations due to the
merger; (g) limitations placed on our ability to operate the business by the
merger agreement; (h) the outcome of any legal proceedings instituted against
TravelCenters and/or others relating to the merger agreement and the merger; (i)
the risk that any announcements relating to the merger could have adverse
effects on the market price of shares of TravelCenters common stock; (j) the
risk that the merger and its announcement could have an adverse effect on the
ability of TravelCenters to retain and hire key personnel and maintain
relationships with its suppliers, licensees, partners and customers, and on its
operating results and businesses generally; (k) the potential impact on BP's
status as a key customer of TravelCenters if the merger is not consummated; and
(l) the fact that TravelCenters's stockholders would forgo the opportunity to
realize the potential long-term value of the successful execution of
TravelCenters's current strategy as an independent company. These
forward-looking statements are also qualified by, and should be read together
with, the "Warning Concerning Forward-Looking Statements," the "Risk Factors"
and the other statements in our most recent report on Form 10-K and subsequent
periodic and interim report filings, in each case as filed with the SEC and
available at www.sec.gov. No assurance can be given that these are all of the
factors that could cause actual results to vary materially from the
forward-looking statements. Except as required by applicable law, we undertake
no obligation to publicly update forward-looking statements, whether as a result
of new information, future events or otherwise. TravelCenters stockholders are
advised, however, to consult any future disclosures we make on related subjects
as may be detailed in our other filings made from time to time with the SEC.
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TRAVELCENTERS OF AMERICA INC. 
