Editor’s Note: Updates with closing stock price
Jon Pertchik’s high-energy efforts to turn around TravelCenters of America (NASDAQ: TA) continued Monday with a $75 million offering of new stock, but shares plummeted, closing nearly 22% below the asking price.
In a U.S. Securities and Exchange Commission (SEC) filing, the operator of 263 full-service travel plazas and truck stops offered slightly more than 3.4 million new shares at $21.88 a share, the closing price on Friday.
In a separate SEC filing on Friday, TA raised its total of outstanding shares to 216 million.
TA shares closed Monday at $17.12, down $4.76 or 21.76% on the NASDAQ.
“Investing in our common stock involves a high degree of risk,” TA said in its prospectus. “You should not rely on an investment in shares of our common stock to provide dividend income. We do not anticipate that we will pay cash dividends to holders of our common stock in the foreseeable future.”
TA’s biggest shareholders, Service Properties Trust (SVC), also known as Hospitality Properties Trust, and The RMR Group LLC (NASDAQ: RMR) agreed to purchase new shares equal to their respective current ownership of approximately 8.2% and 3.6% current ownership.
TA said it would use proceeds from the stock sale for deferred maintenance, capital spending to improve properties, growth initiatives and general corporate purposes.
Underwriters of the offering, including Citigroup, BMO Capital Markets, B. Riley FBR and BTIG, have 30 days to sell up to 15% more shares than the offering, a so-called greenshoe clause.
Named CEO in December, Pertchik is undertaking a dramatic makeover of TA, including hiring a new chief financial officer and five new senior vice presidents to oversee hospitality, corporate, information technology, procurement and fuel. TA laid off 130 corporate employees in May.
Because of the COVID-19 pandemic, in April, TA furloughed 2,900 field employees, many in its Quaker Steak & Lube and Iron Skillet full-service restaurants. TA began “prudent and disciplined” reopenings of dine-in locations in early May and has expanded that to 75 restaurants in 30 states.
“We furloughed because [full-service restaurant] demand dropped by 91%,” Pertchik said in a FreightWaves interview on June 3. “So, we had to do something. As demand is slowly picking up, we’re bringing people back on, but our fullest hope and intent is to bring all of those folks back as the demand rises.”
Pertchik also is pursuing franchisees to take over existing truck stops as one approach to grow the TA, Petro Stopping Centers and TA Express travel center brands.