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.
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.
• 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.”
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.”