Roadrunner Transportation Systems terminated its existing senior secured credit facility with BMO Harris Bank in connection with its plans to spin off Ascent Global Logistics as a stock dividend to stockholders. Although the capital and banking structure of Roadrunner (post-spin-off) has not yet been finalized and specific terms remain to be determined, it is expected that Roadrunner will be capitalized following the spin-off with zero debt and sufficient liquidity and flexibility to pursue future growth opportunities.
The proposed spin-off remains subject to final approval by Roadrunner’s board of directors, and certain tax and legal considerations. The proposed spin-off, which is expected to be completed in August 2020, would create two independent companies: Roadrunner Transportation Systems (doing business as Roadrunner Freight and encompassing the less-than-truckload and truckload businesses) and privately-held Ascent Global Logistics (encompassing Ascent Domestic, Ascent International and Ascent On-Demand).
“With the actions announced today, we are left with two companies positioned to deliver significant value for their customers and investors,” Chris Jamroz, executive chairman of Roadrunner Transportation Systems, said.
Upon successful completion of the spin-off, Frank Hurst will become president of Roadrunner Transportation Systems. Hurst has served as president of Roadrunner Freight since 2017.
Roadrunner’s board of directors expects the spin-off to produce multiple benefits, including (1) the structuring of each business to take advantage of unique growth opportunities in its respective end market, (2) the tailoring of the business model to specific long-term strategies and (3) the aligning of external financial resources, such as access to capital markets and insurance factors, with each business. Additionally, it is expected that corporate spend will be reduced between the two entities by collapsing the Roadrunner Transportation Systems corporate function into the operations of Roadrunner Freight and Ascent Global Logistics.
Ascent will be headquartered in Belleville, MI, and will continue as a provider of domestic freight management, international freight forwarding and expedited transportation services on the ground and in the air. Ascent also executed a term sheet that contemplates a new senior secured revolving credit facility. Upon successful completion of the spin-off, Tom Stenglein will become president of Ascent Global Logistics. Stenglein is currently the president of Ascent On-Demand and CFO of Ascent.
Lincoln International is serving as financial advisor to Roadrunner and Greenberg Traurig is serving as legal counsel. American Stock Transfer & Trust Company, Roadrunner’s transfer agent, will act as the distribution agent for the spin-off.
