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CVC Capital set for dividend from Pilot Travel Centers

by David Carey | Published July 25, 2012 at 8:22 AM

Pilot Travel Centers LLC is awarding CVC Capital Partners about a $130 million dividend, raising the total CVC has extracted to date from Pilot to more than $960 million, according to a person familiar with the matter.

That's 1.5 times the U.K. buyout firm's nearly 4-year-old, $640 million equity investment, the source said.

Pilot owns more than 490 highway stops in 47 states and eight Canadian provinces that dispense diesel fuel and gas to truckers and travelers.

The Knoxville, Tenn., company is marketing a $1.1 billion loan package, $700 million of which it will pay out to shareholders, according to Moody's Investors Service.

CVC, an 18.5% owner, will receive about $130 million. Most of the remaining dividend will go to the family of Pilot founder James Arthur "Jim" Haslam II, who started the business in the late 1950s.

His son, Jimmy, the current CEO, has staged a series of big acquisitions and recapitalizations.

In October 2008, Pilot paid $700 million to buy back Marathon Oil Corp.'s 50% stake in the company. As part of that deal, it sold a 47.5% interest to CVC.

In July 2010, it bought 250 truck stops and travel plazas from Flying J Inc. for more than $300 million. The latter's owners took a stake in the operation, which was rebranded Pilot Flying J. The deal cut CVC's ownership to about 37%.

Early last year, Pilot engineered a $1 billion dividend recapitalization, in which the Haslams used their proceeds to buy back half of CVC's stock, according to the source.

This year it has negotiated purchases of fuel and lubricant transporter Western Petroleum LLC, in February, and, just last week, of petroleum products distributor Maxum Petroleum Inc.

Details of those deals weren't disclosed. Maxum's private equity backers, Metalmark Capital Holdings LLC and Waud Capital Partners LLC, will receive equity stakes in Pilot.

Moody's assigned a Ba2 rating to Pilot's new debt issue. The package comprises a $300 million senior secured loan A add-on, a $700 million senior secured term loan B add-on and a $100 million senior secured revolver add-on.

In addition to the dividend, Pilot will use the proceeds to fund future acquisitions and for general corporate purposes.

A CVC spokeswoman said the firm would not comment.

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Tags: CVC Capital Partners | dividend | PE | Pilot Travel Centers LLC

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