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.
“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.