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Services of Mead Data Central <br /> #9 <br /> 32ND STORY of Level 1 printed in FULL format. PAGE 5 <br /> Copyright (c) 1990 Reuters <br /> October 11 , 1990, Thursday, BC cycle <br /> SECTION: Financial Report. <br /> LENGTH: 406 words <br /> HEADLINE: TRUCK STOP FIRM SEEKS TO EXPAND THROUGH OFFERING <br /> DATELINE: NEW YORE, OCT 11 , REUTER <br /> BODY: <br /> A top U.S. truck stop company, < Flying J Inc>, will begin a 100 min dlr <br /> partnership offering in January to expand its operations. <br /> But analysts said the company's expansion plans may be squeezed by suits <br /> filed against it by former franchisees. <br /> Through privately held real estate partnership units, the offering will raise <br /> cash to buy property for the truck stops, called Flying J Travel Plazas. The <br /> truck stops, which have discount diesel fuel, food and lodging, are then leased <br /> back to franchisees and/or Flying J, with the rent creating much of the return <br /> for investors. <br /> Analysts said two prior offerings for Flying J by its financing partner, <br /> Franchise Finance Corp of America (FFCA) , and Shearson Lehman were successful, <br /> giving investors a nine to 10.5 pct quarterly return on their investment. <br /> Flying J is the target of two lawsuits filed by former franchisees, who <br /> claim the company deceived them about potential profitability of truck stops. <br /> David Lucas, a former franchisee and real estate developer in Charleston, S.C. , <br /> said that in 1989 seven franchisees failed and Flying J bought out five of <br /> them. Lucas has sued Flying J for seven min dirs, seeking treble damages. <br /> Privately held Flying J, based in Brigham City, Utah, said in its <br /> prospectus that the complaints are without merit and that it intends to defend <br /> the actions. Executives at the company did not return calls for comment. <br /> FFCA said the lawsuits will not have a material adverse effect on the <br /> partership offering. <br /> "We foresee this as an extremely good business and we have invested about 130 <br /> min dirs in these travel plazas," said Mort Fleischer, president and chief <br /> executive of FFCA. Fleischer added that previous lawsuits filed by former <br /> franchisees against Flying J have been dismissed. <br /> But, said Larry Kay, a vice president with Standard & Poor's Corp, taking <br /> over defunct franchisees will put an additional burden on Flying J's cash <br /> flow. Kay said that the investor returns should not be affected, unless Flying <br /> J, a highly leveraged company, begins having cash flow problems. <br /> Flying J had 1989 revenues of about 350 min dirs and 70.6 min dirs in debt, <br /> and a two- to-one cebt to equity ratio. <br /> NEXISLEXIST LEXISp LEXIS NEXIS <br />