Truckload and less-than-truckload (LTL) provider Roadrunner Transportation Systems Inc. said today it has closed on a five-year, $292 million financing package that the company's CEO called the "last key step" in the struggling company's recapitalization efforts.
The package consists of a $200 million revolving credit line secured by accounts receivable and spare parts inventory; a $57 million term loan secured by transportation equipment; and a separate $35 million term loan for future transportation equipment financing, the Cudahy, Wis.-based company said. The initial proceeds from the package were used for working capital purposes, and to redeem all outstanding shares of preferred stock that were issued in early May.
"We now have the financing and capital in place to support our current business levels and organic growth over the next five years," said Roadrunner CEO Curt Stoelting in a statement.
Roadrunner offers truckload and LTL services through an "asset-light" model, where it effectively controls capacity without employing drivers or owning equipment. The company ran into trouble in January when it said it would restate four years of financial results because of unrecorded expenses at two of the 34 companies it had acquired between 2005 and 2015. The company has yet to file its annual 10-K report for 2016, citing the complex process of investigating the causes of accounting discrepancies and reviewing its internal control over financial reporting and compliance programs. Under Securities and Exchange Commission rules, the company has until Sept. 30 to do so.
Roadrunner has acknowledged that a multi-year acquisition spree left it with an unwieldy organization—comprised of 20 operating units—that was slow to respond to changing market conditions. This was especially true during 2016, amid declining demand for truckload and LTL services, the company said.
Since then, Roadrunner has restructured into six operating groups. Four of those groups are in truckload, and there is one each in LTL and in Roadrunner's logistics group, the latter of which is known as Global Solutions. The four groups in the new truckload segment cover air and ground expedited; temperature-controlled; intermodal; and asset-based brokerage services.
In March, Roadrunner formed a unit focused on temperature-controlled services made up of two of its acquisitions: M. Bruenger and R&M Transportation.
Separately, Roadrunner said it named Scott L. Dobak, CEO of Dicom Transportation Group, a Montreal-based transport and logistics provider, and Ralph "Cody" Kittle, an analyst at Elliott Management Corp., a New York-based hedge fund, to its board. Dobak headed Roadrunner's LTL and third-party logistics (3PL) businesses for six years, until December 2013, when he joined Dicom. However, Kittle's appointment may be more significant for Roadrunner's future, because he works for a company whose CEO, Paul Singer, is known for high-profile investments in securities of distressed companies using a corporate activist approach.
Roadrunner's stock, which two years ago traded in the high-$20-per-share range, closed today at $7.02 per share. It traded as low as around $6 per share in the spring.
