Scrutiny of Pilot Flying J continues to mount

By Jami Jones, Land Line managing editor | 4/25/2013

Hot on the heels of a criminal investigation and a civil lawsuit, Pilot Flying J is now looking down the barrel of a potential financial hit.

Moody’s Investor Services has placed all of Pilot Travel Centers LLC credit ratings on review. The review is prompted by the recent announcement that Pilot Flying J is the subject of an ongoing federal investigation, according to a notice of the review issued by Moody’s.

“The review will focus on the details of the investigations as they become available and any potential impact the investigation or its findings could have on the company’s overall operations, supply or its liquidity, including maintaining orderly access to its bank revolver,” the Moody’s notice states.

A downgrade in credit rating would not be welcome news for the organization.

“A Moody’s downgrade of any business tends to raise their cost of borrowing,” said Donald Broughton, senior transportation analyst with Avondale Partners. Broughton specializes in transportation stock analysis.

If a downgrade in Pilot Travel Centers’ credit ratings happens, it will result in one of two things.

In an industry such as truck stops and fueling locations, there is an ongoing need to have large amounts of money invested in inventory – i.e., millions of gallons of fuel. Higher borrowing costs mean either lower profit margins or higher product costs, which would inevitably be passed on to the consumer.

Related articles and blogs:
From the LL Blog: Pilot Flying J affidavit reveals possible racism 
Haslam: 'If we owe them money, we will write them a check immediately'
From the LL blog: 'Low hanging fruit'
Georgia trucking company files lawsuit against Pilot Flying J
New details emerge in Pilot Flying J criminal investigation
FBI, IRS investigation focuses on Pilot Flying J customer 'rebate' program

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