Quaker Steak Files Chapter 11, $25M Purchase Deal
SHARON, Pa. – Quaker Steak & Lube announced late Monday that it is filing for Chapter 11 bankruptcy reorganization that includes a $25 million asset purchase agreement with TravelCenters of America. The acquisition deal is subject to court approval following a court-supervised auction during which the Travel Centers agreement would be subject to higher bids.
Quaker Steak’s announcement of its bankruptcy reorganization and potential acquisition comes one business day after its parent company, Lube Holdings Inc., and 12 affiliated companies sought an extension to Nov. 20 for the company to respond to Well Fargo Bank’s motion for a summary judgment in the amount of $4.2 million. That litigation, filed in September in U.S. District Court in Mississippi, claimed Quaker Steak stopped making payments in August 2014 on its commercial loan with Wells Fargo.
Bankruptcy documents referred to by Quaker Steak in its announcement could not immediately be retrieved. Nor did the company specify in what federal court district the case was filed. Thus no listing of assets and liabilities was readily available.
Quaker Steak, founded in 1974, has 50 restaurant operations in 16 states, primarily in Pennsylvania and Ohio. Most are franchise operations, according to the company.
TravelCenters, traded on the New York Stock Exchange, operates more than 500 full and quick serve restaurants, principally in 253 full-service travel centers and 184 convenience stores in 43 states. The company is based in Westlake, Ohio. For the nine months ended Sept. 30, it reported net income of $29.3 million, compared to $26.6 million for the first nine months of 2014.
In a prepared statement, the CEO of TravelCenters, Tom O’Brien, said Quaker Steak’s ‘unique brand and award-winning is a great fit for [our] primary customers – professional truck drivers and highway motorists.”
TravelCenters plans to covert some of its full-service restaurants to The Lube brand, he continued. “Also, we expect to expand The Lube’s existing franchise program, as well as its company-operated restaurants separate from our travel centers.”
TravelCenters said its has placed a substantial deposit toward the $25 million purchase price and agreed to offer employment following the closing to substantially all of Quaker Steak & Lube’s current employees. In addition to the acquisition agreement, Quaker Steak’s Chapter 11 filing includes $2 million worth of debtor-in-possession financing agreements with TravelCenters.
In his prepared statement, Greg Lippert, CEO of Quaker Steak, cited TravelCenters’ “in-depth experience and resources to help Quaker Steak & Lube build upon our system’s positive performance and help us fully realize our expansion goals.”
Lippert described the company’s future as “bright. We foresee a positive impact from these transactions to our restaurants. In fact, under TA, we’re confident that the number of our locations will continue to grow and our franchise owners, employees and suppliers will benefit from a stronger Quaker Steak & Lube.”
Pictured: Quaker Steak & Lube restaurant in Austintown, Ohio.
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