NEW YORK, Aug. 18, 2015 /PRNewswire/ -- RDG Capital Fund Management (together with its affiliates "RDG"), a shareholder of TravelCenters of America ("TA" or the "Company") (NYSE: 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.
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.
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, portfolio management considerations, 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.
Contact: Ryan Schoenig RDG Capital Fund Management LP (212) 407-2199 email@example.com
SOURCE RDG Capital Fund Management