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Pilot Investigation Makes the Front Page of the WSJ

Today's Wall Street Journal has a front page article, "Truck-Stop Royalty Shaken By FBI Fraud Investigation." Alas, it is behind the paper's very hard-to-get-around paywall, so unless you have a subscription or pick up a print copy, you're probably not going to be able to read the whole thing. (Unless they remove it from behind the paywall in a few days, which sometimes happens.)

Luckily, you have us. We can't ethically copy and paste the whole thing, because we really don't want Rupert Murdoch's lawyers coming after us, but we can share some interesting chunks. What's especially of note is that the Haslams -- Jimmy and Governor Bill -- cooperated with the WSJ reporters. Still, the portrait painted is both slightly sympathetic and somewhat skeptical. (Oh, and there's a photograph of Jimmy taken by our regular freelancer, Shawn Poynter!) Excerpts below:

On a glorious recent evening, when many people were outdoors barbecuing, Jimmy, now the 59-year-old chief executive of privately held Pilot, was inside his home, flanked by his wife, Dee, his dad and his stepmother, Natalie.

The room had gone dead silent as he considered the dark cloud hanging over his company and his family. Investigators appear to be pressing for indictments, maybe even his, he acknowledged. He says he hasn't done anything wrong and he is "very comfortable" with his personal position.

"I really can't worry about indictments because I have no control," he says slowly. "My focus has got to be on fixing the problem with the companies [that are Pilot's customers], making it right if we owe them something. I got to focus on what I can control."

And:

Pilot was already under pressure to grow revenue, according to Jimmy Haslam. ...

The company's debt nearly doubled to $4 billion in a two-year period through last year, as its owners paid themselves two payments totaling $1.7 billion from it, according to Moody's. Last year, Pilot issued $1.1 billion of the debt--largely to fund the second one, a dividend for $700 million, according to S&P. That was partly so Jimmy could buy the Cleveland Browns. Mr. Ingram said the Moody's and S&P numbers contained inaccuracies, but declined to elaborate. ... S&P downgraded Pilot's debt, calling its financial risk "significant."

And:

Big Jim, an offensive tackle on UT's 1951 championship football team, managed it according to the seven maxims of his UT football coach, General Robert Neyland, particularly Maxim #5: "Cover, Block, Cut and Slice...for this is the WINNING EDGE." 

And:

But the family's life has changed since the FBI raid. In the governor's office, Bill Haslam, 54, who worked at Pilot 18 years, says it is difficult to concentrate. "It's my father, my brother," he says. "I have a job to do, but that doesn't mean that inside you aren't hurting."

And:

If necessary, Mr. Haslam says, Pilot could pay its debt down quickly.

For the first time ever, in April, he was excluded from an executive session of a Pilot board meeting as it decided to hire Reid Weingarten, prominent white collar criminal defense lawyer, to conduct an independent audit.

And:

Mr. Haslam said any problems with Pilot's rebates and discounts might be the byproduct of rapid growth, not the result of profit pressures on Pilot employees. "Now, are we demanding? Yes. This is a very accountable organization with high goals," he says, "but never is it ever, ever suggested that anybody should do anything wrong in accomplishing those goals."

And finally:

Mr. Haslam won't discuss the particulars of the April FBI raid. All he says, his normally booming voice quaking, is: "I'm glad Dad wasn't there, OK?" Big Jim first heard of it in a phone call from his assistant on a bike ride in Hilton Head, S.C. Bill Haslam got a text alert on his cellphone. "I'm thinking, what in the world?" he said. He thought something violent had occurred.

Now the Haslams face a long summer. In the month after the raid, Pilot sales dipped and its suppliers began to shorten the time they gave Pilot to pay them. The ratings firms are wary of that kind of reaction because it could hurt Pilot's liquidity. Jimmy Haslam says things now have stabilized.

As the Haslams have always done, they examine the sayings of Coach Neyland for guidance. Big Jim is focusing on Maxim #3 these days. When the game goes against you, he says, "don't slow down and get rattled. Put on more steam. Well, this is what we're doing now."

The whole story really is worth reading, so if you can get to the library or something, check it out.

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