RDG Capital Recommends Initiatives To Enhance Shareholder Value At TravelCenters of America

NEW YORK, Feb. 25, 2015 /PRNewswire/ -- RDG Capital Fund Management ("RDG"), a shareholder of TravelCenters of America ("TA" or the "Company") TA, announced today it delivered a letter to the Board of Directors of TA (the "Board"). The letter noted that despite continuing operational improvements and recent share price appreciation, RDG believes TA remains significantly undervalued. RDG recommends a sale leaseback of the Company's significant real estate assets and the spinoff of its growing truck repair services segment to meaningfully enhance shareholder value. RDG believes these actions would help unlock the fair market value of the Company which RDG estimates at $24 – $27 per share.

RDG notes that TA trades at only 4.8x estimated 2015E EBITDA, which represents a substantial discount to its industry peers. Although TA operates the #3 travel center chain and the #1 truck repair services business nationwide, RDG believes TA is undervalued because the market fails to recognize the Company's valuable real estate assets and misperceives TA as a slow growth, low-margin, commodity-oriented fuel company rather than the higher margin, growing chain of 359 quick service restaurants, 218 full service restaurants, 34 convenience stores, and 240 truck repair facilities that contribute the majority of TA's profits.

RDG believes the value of TA's real estate and truck repair segment alone are worth more than the entire market cap of TA, implying virtually no value is ascribed to TA's other business segments which generate $7 billion in revenue.

To address the undervaluation of the Company, RDG encourages the Board to consider the following actions:

• Monetize Real Estate via Sale Leaseback
  TA owns a substantial portfolio of premier real estate assets, including 36 travel centers, 27 convenience stores and 348 acres along the U.S. interstate highway system which RDG believes the Company should monetize via a sale leaseback transaction worth approximately $400 million net of estimated taxes. Adjusting for incremental capitalized rent, RDG believes such a sale leaseback transaction could increase shareholder value by $5.70 to $6.40 per share or approximately +45% upside.

• Spinoff Truck Repair Services Segment 
  The Company has built the nation's leading truck repair services business with 240 locations and $750 million in 2015E revenue. RDG believes the truck repair services segment is an underappreciated "hidden asset" worth in excess of $300 million that if spun off would trade at a valuation multiple significantly higher than the valuation multiple ascribed to the Company on a consolidated basis. RDG believes such a spinoff could increase shareholder value by $2.70 to $3.35 per share or approximately +20% upside.

Following the monetization of TA's real estate assets and the spinoff of its truck repair services segment, RDG believes the valuation of the Company's remaining fuel, convenience store and restaurant business segments would also improve.

• Restaurant / Fuel & Convenience Store Segment Valuation Boost  
  Based on a reasonable discount to the valuation multiples of industry peers, RDG believes the Company's remaining fuel, convenience store and restaurant business segments would collectively be worth in excess of $650 million. This improved valuation could increase shareholder value by $3.45 to $5.45 per share or approximately +25% upside.

In summary, RDG believes if its recommendations are successfully implemented, TA would trade between $24 and $27 per share or approximately +90% upside.

The full text of the letter can be found here.

About RDG Capital Fund Management

New York-based RDG Capital Fund Management ("RDG") is a private investment firm founded by Russell Glass, the former President of Icahn Associates. RDG manages investment funds which primarily focus on undervalued companies with identifiable catalyst opportunities to enhance shareholder value.

Important Disclosures

Any views expressed herein represent the opinions of RDG, whose analysis is based solely on publicly available information. No representation or warranty, express or implied, is made with respect to the accuracy, timeliness or completeness of the information contained herein. RDG expressly disclaims any and all liability based, in whole or in part, on such information, any errors therein or omissions therefrom. Any opinions expressed herein are subject to change without notification. Forward looking statements involve certain risks and uncertainties and assumptions. Actual results may differ materially from those contained in forward looking statements. RDG does not assume any obligation to update, correct or revise the information contained herein. RDG intends to review its managed funds' investment in the Company on a continuing basis and may from time to time and at any time in the future depending on various factors, including, without limitation, the outcome of any discussions referenced above, the Company's financial position and strategic direction, actions taken by the Board, price levels of the Company's shares, other investment opportunities available to RDG, conditions in the securities market and general economic and industry conditions, take such actions with respect to its managed funds' investment in the Company as it deems appropriate, including, without limitation: (i) acquiring additional shares and/or other equity, debt, notes, other securities, or derivative or other instruments that are based upon or relate to the value of the shares or the Company in the open market or otherwise; (ii) disposing of any or all of such securities or instruments in the open market or otherwise; or (iii) engaging in any hedging or similar transactions with respect to such securities or instruments.

Figures may represent estimates of RDG or third parties and may not be indicative of future results. There is no assurance or guarantee with respect to the prices at which any securities of the Company will trade, and such securities may not trade at prices that may be implied or stated herein. The estimates and pro forma information set forth herein are based on assumptions that RDG believes to be reasonable, but there can be no assurance or guarantee that actual results will not differ materially. The information contained herein does not recommend the purchase or sale of any security nor is it an offer to sell or a solicitation of an offer to buy any security. Furthermore, the information contained herein is not intended to be, nor should it be construed or used as, investment, tax or legal advice. No representation or warranty is made that RDG's investment process or investment objectives will or are likely to be achieved or successful or that RDG's managed funds' investments will make any profit or will not sustain losses. Past performance is not indicative of future results. Nothing contained herein should be taken as any form of commitment on the part of RDG to take any action in connection with any particular security. RDG and its affiliates are in the business of buying and selling securities. They have, and may in the future, buy, sell or change the form of their position in the Company or any security for any or no reason whatsoever. RDG has neither sought nor obtained the consent from any third party to use any statements or information contained herein that have been obtained or derived from statements made or published by such third parties which RDG may not be able to independently verify. Any such statements or information should not be viewed as indicating the support of such third parties for the views expressed herein. Furthermore, RDG makes no representations or warranties as to the accuracy, timeliness or completeness of such information.

PDF - http://origin-qps.onstreammedia.com/origin/multivu_archive/ENR/177308-RDG-Capital-Letter-to-TravelCenters-of-America.pdf

CONTACT: Ryan Schoenig
RDG Capital Fund Management LP
(212) 407-2199
rschoenig@rdgcap.com

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SOURCE RDG Capital Fund Management