RDG Capital Fund Management
(together with its affiliates "RDG"), a shareholder of TravelCenters of
America ("TA" or the "Company") TA, announced today it has delivered
a letter to the Company's Board of Directors (the "Board") strongly
recommending a $100 million share buyback that RDG estimates would increase
TA's stock price by more than 33% to $17 per share.
RDG commends the Board for its recently announced initiative to monetize a
portion of the Company's real estate. However, RDG believes the labyrinth of
complex sale leaseback transactions has led to investor confusion which has
caused the Company's share price to remain significantly undervalued. RDG
notes that TA trades at a 2015 estimated P/E multiple of just 12.9x, a
material discount to its fuel and convenience store industry peer group
median of 23.1x. This mispricing creates a share buyback opportunity that
can increase both earnings per share and net asset value per share while
demonstrating the Board's confidence in management's ability to successfully
execute the Company's business plan.
Following the recommended stock buyback, RDG believes TA would still have
ample debt service coverage and liquidity to continue to fund the Company's
growth through acquisition and greenfield development. Furthermore, even
after the recent series of sale leaseback transactions, RDG estimates that
TA still owns real estate worth more than $400 million which provides a
significant source of future liquidity to replenish cash spent on an
opportunistic stock buyback.
RDG has asked the Board to seriously consider this recommendation and act
quickly to take advantage of the Company's undervalued stock for the benefit
of all shareholders.
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