In just a few short months, Jack Cooper went from negotiating with General Motors on steps to shore up the auto carrier’s finances to permanently closing after taking two blows from the nation’s two largest auto makers.
It was a swift end to Jack Cooper, in business for almost 100 years. It had survived a Chapter 11 process in 2019 but couldn’t survive the upheaval of the past few months.
Monday’s announcement of Jack Cooper’s closure wrapped up a tumultuous period, the past five-plus weeks playing out in public beginning with the Jan. 2 notification that Jack Cooper received from Ford (NYSE: F), saying the automaker was invoking a 30-day out clause to end its relationship. News of that move by Ford trickled out over the next few days.
But based on conversations with sources close to companies involved in the rupture that has ended Jack Cooper’s long tenure as a major auto carrier, the circumstances that led to its demise began before that over the question of financing.
According to those sources, Jack Cooper and GM (NYSE: GM) had begun discussions approximately three months ago on GM supporting Jack Cooper’s capitalization in some form, though it would not have taken an equity stake. The dollar figure under discussion was unknown.
Jack Cooper is privately held by members of the Riggs family and top executive Sarah Amico, formerly Sarah Riggs.
GM’s requirement was that Ford also take a role in strengthening the financial base of Jack Cooper. However, Jack Cooper executives told GM that its contractual agreements with Ford would not allow it to make such a request.
Instead, Jack Cooper asked GM to make the request to Ford, according to sources. That kicked off a process of GM being rebuffed after approaching Ford. Ford eventually ended its relationship with Jack Cooper.
Jack Cooper did secure a $200 million investment commitment from another unidentified party, but GM rejected that. (One source described the terms of that private equity financing as “onerous.”) GM’s contractual arrangement with Jack Cooper allowed the automaker that kind of veto power.
GM’s concern was that it needed to ensure the solvency of one of its biggest auto haulers. But that solvency was in question with Ford’s rejection of financing and GM’s decision not to green-light the private equity investment.
That began the process that ultimately resulted in the rupture between GM and Jack Cooper, the final blow that led to the company’s demise.
A spokesman for GM declined comment on the process that led to the Jack Cooper closure or his company’s role in the final outcome. However, he did say that GM “has secured a new supplier to handle the capacity that was managed by Jack Cooper.” He declined to identify that carrier.
One possible development from the news of Jack Cooper’s closure: The stock price of Proficient Auto Logistics (NASDAQ: PAL), the newly publicly traded auto carrier, which touts its nonunion status, rose sharply Tuesday to hit its historical high.
The stock opened near $8 per share Monday and reached the high of $11.37 Tuesday. It closed at $10.73.
Proficient, which was created by a rollup of several auto carriers, began trading in May. Its low price since then was $7.24, recorded Dec. 20.
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