• DATVF.ATLPHL
    1.714
    -0.061
    -3.4%
  • DATVF.CHIATL
    1.944
    0.039
    2%
  • DATVF.DALLAX
    0.898
    -0.033
    -3.5%
  • DATVF.LAXDAL
    1.537
    0.003
    0.2%
  • DATVF.SEALAX
    0.901
    0.066
    7.9%
  • DATVF.PHLCHI
    0.962
    -0.018
    -1.8%
  • DATVF.LAXSEA
    2.139
    0.018
    0.8%
  • DATVF.VEU
    1.540
    -0.013
    -0.8%
  • DATVF.VNU
    1.426
    0.005
    0.4%
  • DATVF.VSU
    1.218
    -0.014
    -1.1%
  • DATVF.VWU
    1.520
    0.042
    2.8%
  • ITVI.USA
    10,531.040
    -57.980
    -0.5%
  • OTRI.USA
    6.020
    0.110
    1.9%
  • OTVI.USA
    10,502.790
    -61.450
    -0.6%
  • TLT.USA
    2.440
    -0.020
    -0.8%
  • WAIT.USA
    150.000
    -1.000
    -0.7%
  • DATVF.ATLPHL
    1.714
    -0.061
    -3.4%
  • DATVF.CHIATL
    1.944
    0.039
    2%
  • DATVF.DALLAX
    0.898
    -0.033
    -3.5%
  • DATVF.LAXDAL
    1.537
    0.003
    0.2%
  • DATVF.SEALAX
    0.901
    0.066
    7.9%
  • DATVF.PHLCHI
    0.962
    -0.018
    -1.8%
  • DATVF.LAXSEA
    2.139
    0.018
    0.8%
  • DATVF.VEU
    1.540
    -0.013
    -0.8%
  • DATVF.VNU
    1.426
    0.005
    0.4%
  • DATVF.VSU
    1.218
    -0.014
    -1.1%
  • DATVF.VWU
    1.520
    0.042
    2.8%
  • ITVI.USA
    10,531.040
    -57.980
    -0.5%
  • OTRI.USA
    6.020
    0.110
    1.9%
  • OTVI.USA
    10,502.790
    -61.450
    -0.6%
  • TLT.USA
    2.440
    -0.020
    -0.8%
  • WAIT.USA
    150.000
    -1.000
    -0.7%
American ShipperShipping

Roadrunner raises $450 million to speed up ‘recovery’

Simplification and improvement of capital structure will support long-term business plans, says the logistics and transportation company.

   Roadrunner Transportation Systems Inc. said Wednesday that it had raised $450 million through a rights offering.
   “We believe the simplification and improvement of our capital structure accomplished through the rights offering will support our long-term business plans and increase the speed and likelihood of a full operational recovery for Roadrunner,” said Curt Stoelting (pictured), chief executive officer.
   The company sold 900 million new shares of common stock at the subscription price of 50 cents per share.
   Roadrunner said 177,676,223 shares were purchased pursuant to the exercise of basic subscription rights and over-subscription rights from stockholders of record during the subscription period, including from the exercise of basic subscription rights by stockholders who are funds affiliated with the activist investment fund Elliott Management Corp.
   In addition, Elliott purchased an aggregate of 722,323,777 additional shares pursuant to a previously announced “backstop commitment” from Elliott to purchase all unsubscribed shares of common stock in the rights offering. All told, Elliott  purchased 843,632,693 shares of the company’s common stock between its basic subscription rights and a backstop commitment. Elliott now beneficially owns approximately 90.4 percent of Roadrunner’s common stock. The remaining shares were purchased by other stockholders.
   Roadrunner explained in the registration statement for the offering that through the rights offering Elliott would “effectively convert shares of Roadrunner’s preferred stock into common stock.”
   The net proceeds from the rights offering and backstop commitment were “used to fully redeem the company’s outstanding shares of its preferred stock and to pay related accrued and unpaid dividends,” the company said Wednesday. Proceeds also were used to pay fees and expenses in connection with the rights offering and backstop commitment. Roadrunner retained in excess of $30 million for general corporate purposes.
   In a presentation earlier this month, Roadrunner called itself “a U.S.-based asset-right transportation and asset-light logistics service provider with national scale.” It has three brands:
   • Roadrunner Transportation, which offers less-than-truckload, over-the-road truckload and intermodal services. 
   • Active On-Demand, which offers premium time-definite expedited air and ground logistics. 
   • Ascent Global Logistics, which offers domestic freight management (brokerage and third-party logistics), retail consolidation, international freight forwarding and customs brokerage.
   The company said it grew rapidly between its initial public offering in 2010 and 2015 through an aggressive acquisition strategy, but began having poor performance in 2015 and had debt compliance issues with an over-leveraged balance sheet.
   Two years ago Roadrunner said an internal investigation concluded that several of its 10-K and 10-Q statements to the U.S. Securities and Exchange Commission were unreliable and may have overstated earnings by as much as $25 million.
   Last June, two former employees were indicted in what the Department of Justice said was “a massive securities and accounting fraud scheme that misled shareholders, regulators and the investing public and ultimately caused a loss of more than $245 million in shareholder value.”
   Roadrunner said new management has since restructured and stabilized the business. In the 12-month period ending Sept. 30, revenue amounted to $2.2 billion.
   The company said going forward that its logistics business growth trend was expected to continue and that recovering transportation businesses have the potential to add equity upside. 
   “Once fully recovered, management believes it is building sustainable industry platforms that it expects to deliver growth, profits and returns,” the company said in the presentation this month. “As business recovers, portfolio alternatives provide potential for accelerated deleveraging and/or reinvestment opportunities.”

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Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.
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