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Roadrunner $50M equity raise led by GlobalTranz, Emerge founder Leto

Former Stifel analyst Dave Ross joins as EVP

Roadrunner will use proceeds from equity raise to upgrade technology (Photo: Roadrunner)

Roadrunner (OTC: RRTS) announced Thursday it recently closed an equity private placement for $50 million. The round was led by a $10 million investment from Andrew Leto, who founded third-party transportation providers GlobalTranz and Emerge.

The proceeds are expected to be used for technology investments centered on “planning, pricing and efficiency.” The company will also use the funds to bolster its leadership roster and improve service.

“Roadrunner is really a technology moving trucks, not a trucking company. Every shipper needs a consolidator like Roadrunner, and most are not taking advantage of what Roadrunner has to offer. We are changing that,” said Leto.

The new shares have the same liquidation preference as the subscription price, which was a 15% discount to the trading price when the deal was struck earlier in 2021.

The Downers Grove, Illinois-based company has been engaged in a significant restructuring to stem losses, improve its capital structure and refocus on core operations. Those efforts included the spinoff of Ascent Global Logistics, unwinding several previously failed acquisitions and delisting from the New York Stock Exchange.

The goal was to create a less capital-intensive structure primarily focused on less-than-truckload.

“This team has done a great job cleaning up a mess and getting Roadrunner back to its roots in LTL. I look forward to helping drive this transformation, especially through our technology development,” Leto added.

Leto will join Roadrunner’s board. He is currently CEO at Emerge.

Kevin Shuba, former CEO of railroad holding company OmniTRAX, joins the board as well. He is currently a senior adviser to OmniTRAX’s parent, The Broe Group

“Andrew and Kevin join us as meaningful owners in our business with the energy and knowledge to help drive significant value creation as we continue our transformation,” said Chris Jamroz, executive chairman of Roadrunner.

Former Stifel Financial (NYSE: SF) equity research analyst Dave Ross has joined Roadrunner as a partner and EVP. His role will focus on operations, pricing and strategy. Ross has been a transportation analyst for 20 years, most recently serving as group head for transportation and logistics equity coverage at Stifel.

Roadrunner issued a brief service update, noting “record-level on-time delivery rates and the lowest exceptions in company history” for the first two months of the year. The company plans to launch guaranteed service on some lanes by the end of spring. 

The $50 million round also included affiliates of Elliott Investment Management, Fox Hill Capital, Memento S.A. and Solas Capital.

Elliott gained a 90% stake in Roadrunner following a 2019 rights offering.

“We are thrilled to welcome partners to this business who share our vision of an unwavering focus on service and quality for our customers and an improved experience for our drivers,” said Jamroz.

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  1. Mike Udermann

    “Roadrunner is really a technology moving trucks, not a trucking company. Every shipper needs a consolidator like Roadrunner, and most are not taking advantage of what Roadrunner has to offer. We are changing that,” said Leto.

    Really – this statement in and of itself is not accurate. Roadrunner is a trucking company (with drivers, trucks, trailers, terminals) utilizing technology to enhance their business operations to effectively and efficiently move their customers freight. Anyone involved in trucking knows and understands that. Either FreightWaves misunderstood the comment or printed in incorrectly or as noted, Michael Leto is a very well respected leader in our industry and if this is what he said, then he had to have misspoke.

    Technology is a conduit – in order to move freight, it takes the infrastructure of physical assets to do so, as noted, (drivers, trucks, trailers, terminals) and people to make that happen!

    1. Johnny Irish

      Mike, Mike, Mike your so correct and so totally wrong at the same time. Mr. Leto knows what he is talking about. Be Honest he just dropped a soft 10 Million into Road Runner and lately into the digital market place of My Carrier in AZ. My Carrier does LTL on a digital platform and I am sure 1 of it main carriers will be Road Runner. I know WHO CARES. Now a need to know fact is that the Emerge company is pinging for AGENTS all over the US and Emerge does not offer agents a in house LTL option. However Emerge does facility to facility line haul for Road Runner. So you have to give Mr. Leto credit for thinking or keeping everyone outside the box. Congrats! To Road Runner, Emerge and My Carrier and just imaged no SEC to deal with Awesome!

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.