TA TravelCenters of America Inc

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:

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: