Knight expects ‘manageable’ net leverage ratio following Swift merger

By Devika Patel

Knoxville, Tenn., April 10 – Knight Transportation, Inc. announced that it intends to merge with Swift Transportation Co. in an all-stock transaction.

The companies said in a press release that the Swift credit facilities are not required to be refinanced in connection with the merger but may be refinanced in the future on more attractive terms.

The combined company will be named Knight-Swift Transportation Holdings Inc. and the companies expect that the merged entity will have a “manageable initial net leverage ratio” of 1.3x.

“In our industry, we believe a strong balance sheet is a strategic advantage,” Knight’s chief financial officer Adam Miller said on the company’s conference call announcing the transaction on Monday.

“Swift has made a lot of progress deleveraging since going public in 2010, while Knight is essentially debt-free.

“This results in a combined balance sheet with a manageable initial net leverage ratio of 1.3x.

Going forward, the companies expect “meaningful” free cash flow, which in turn will be used towards deleveraging.

“We also believe the combined entity will generate meaningful free cash flow and will allow us to deploy capital towards accelerated deleveraging, capital returns and future growth initiatives,” Miller said.

“Maintaining a strong balance sheet with low levels of debt has always been a part of the culture at Knight and we intend to pursue that same path moving forward,” Miller said.

Under the terms of the agreement, each Swift share will convert into 0.72 shares of Knight-Swift through a reverse stock split. Each Knight share will be exchanged for one Knight-Swift share.

Upon closing, Swift stockholders will own about 54% and Knight stockholders will own approximately 46% of the new company.

Knight is a trucking company based in Phoenix.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.