By Marisa Wong
Morgantown, W.Va., May 4 – Roadrunner Transportation Systems, Inc. disclosed details of its previously announced preferred stock investment in an 8-K filed Thursday with the Securities and Exchange Commission.
Affiliates of Elliott Management, an existing holder of about 8.6% of Roadrunner’s common shares, agreed to purchase $540,500,100 of newly issued redeemable preferred stock from Roadrunner.
The preferreds include $155 million of series B cumulative redeemable preferreds, $55 million of series C cumulative redeemable participating preferreds, $100 of series D cumulative redeemable participating preferreds, $90 million of series E cumulative redeemable preferreds and $240.5 million of series F cumulative redeemable preferreds.
On Tuesday, the company said it paid off and terminated its senior credit facility using proceeds from the preferred stock. Remaining proceeds will be used to provide working capital to support current operations and future growth.
The company said before that it expects to replace roughly $240 million of the preferred stock investment – series F and, to the extent available, series E – with a new asset-based lending facility with a group of commercial lenders that may include members of the company’s previous bank group.
If an ABL facility is not in place within 90 days of closing, the portion of the preferred stock investment that serves as a short-term bridge will convert into a first-lien secured note due July 2019.
The remaining $300 million preferred stock investment is structured in four series – series B, C, D and E – which have terms of either six or eight years and a Libor-based dividend rate of between 8.75% and 16.5%, depending on leverage ratios and other factors. The exact rates and maturities are included in the table below.
A portion of the dividends can be paid in kind at the company’s option.
The preferred stock has no financial covenants.
The company may call a $90 million series of preferred stock with proceeds from an asset sale or potentially convert that same amount into a 5˝-year second-lien secured note with no amortization. There are redemption and liquidation premiums for series of preferred stock that would increase Elliott Management’s overall return, including a 65% liquidation premium on a $55 million preferred stock series.
In addition, one series of the preferred stock, combined with warrants issued as part of the transaction, effectively give Elliott Management a 5% common equity economic interest in the company, as previously noted.
Finally, subject to regulatory approval, Elliott Management will have the right to appoint up to two board members as part of its investment.
Roadrunner is an asset-light transportation and logistics service provider based in Cudahy, Wis.
| Issuer: | Roadrunner Transportation Systems, Inc.
|
| Issue: | Redeemable preferred stock
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| Amount: | $540,500,100
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| Investors: | Elliott Associates, LP and Brockdale Investments LP
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| Settlement date: | May 2
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| Series B
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| Amount: | $155 million
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| Maturity: | Eight years
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| Dividend rate: | Libor plus 300 bps plus 475-1,250 bps depending on leverage
|
| Call option: | Conditionally at 105 for the first two years, 103 for year three, par after that
|
| Put option: | Upon change of control at 105 for first two years, par after that
|
|
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| Series C
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| Amount: | $55 million
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| Maturity: | Eight years
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| Dividend rate: | Libor plus 300 bps plus 475-1,250 bps depending on leverage
|
| Call option: | Conditionally at make-whole amount
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| Put option: | At par upon change of control
|
|
|
| Series D
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| Amount: | $100 million
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| Maturity: | Eight years
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| Call option: | Conditionally at par
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| Put option: | At par upon change of control
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|
|
| Series E
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| Amount: | $90 million
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| Maturity: | Six years
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| Dividend rate: | Libor plus 525 bps plus 850 bps
|
| Call option: | At any time, at 106.5 for the first year, 103.5 for year two, par after that
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| Put option: | Upon change of control at 106.5 for first two years, par after that
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| Series F
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| Amount: | $240.5 million
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| Maturity: | Six years
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| Dividend rate: | Libor plus 525 bps plus 850 bps
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| Call option: | At any time, at 106.5 for the first year, 103.5 for year two, par after that; at 101 if prior to refinancing
|
| Put option: | Upon change of control at 106.5 for first two years, par after that; at 101 if prior to refinancing
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