Friday, September 27, 2013

Road Haulage Group Quits LTL Business as Logistics Magnate Swoops

Another Sell Out Which Excludes Canadian Business
Shipping News Feature

NORTH AMERICA – Less than truckload (LTL) road haulage group Vitran Corporation, announced earlier this week that it has entered into an agreement to sell its struggling US LTL business to an unnamed company owned by industry logistics veteran Matthew Moroun. Under the terms of the proposed sale transaction, an entity controlled by Moroun will pay $2 million to acquire 100% of the common stock of the wholly-owned US subsidiary. In addition to this buyout, Vitran received a proposal from shareholder TransForce to acquire all of the issued and outstanding shares of Vitran at a price of $4.50 per share in cash. As with the sale this week of Bellville International to OIA Global, Vitran’s Canadian interests are excluded from the deal. Speaking about the transaction Vitran's Interim President and Chief Executive Officer William Deluce, said:

"We are pleased to have reached an agreement to sell our US LTL business. For the last several years, Vitran has invested substantial time and capital to improve its US operating results. While we believe these efforts have made Vitran's US LTL business a better operating company, they did not result in financial results that are acceptable to management or the Board.

"With the assistance of our financial advisors, we have evaluated a wide range of strategic alternatives over the last five months. We are pleased to have agreed upon a plan that we believe gives Vitran's US LTL employees and customers the best chance to prosper while also preserving value for all of Vitran's stakeholders.

"We are also excited about the positive impact this transaction will have on Vitran's Canadian LTL business. Over the last 25 years, Tony Trichilo [President, Vitran Express Canada] and his team have built one of Canada's premier providers of LTL services. This model has resulted in consistent profitability and cash flow generation. With this transaction, we are now excited to be solely focused on the Canadian business, which currently has cash of approximately $22 million."

By buying the US subsidiary, Moroun’s company will assume the US business’s ongoing liabilities. The transaction is scheduled to close within 10 business days and is subject to certain conditions with Stephens Inc acting as Vitran’s financial advisor in connection with the proposed sale transaction. Chris Keylon, President, Vitran US said:

“I’m very excited about this acquisition. I look forward to the stability and consistency that we now have, and personally am excited to remain with the company. This should be very assuring to Vitran employees and customers as we now can complete many of the positive initiatives we have been pursuing.”

Matthew Moroun is the son of trucking and logistics magnate Manuel ‘Matty’ Moroun. Together they share a majority stake in Universal Truckload. Matthew is associated with a number of transportation companies whose interests include LTL, TL, flatbed, third party logistics and warehousing and he controls trucking company PAM Transportation.

The proposal by TransForce, sent to Vitran’s Chairman of the Board of Directors, is conditional upon this sale of the US LTL business. An important aspect of the offer is that Vitran would remain a standalone business within the TransForce group of companies and TransForce say that it is keen that the existing management team remain with Vitran going forward to continue to execute their business plan.

TransForce currently controls 9.51% of the outstanding shares of Vitran and is in the process of reviewing its alternatives related to the proposal, including, if the Board of Directors of Vitran do not engage in negotiations taking the proposal directly to shareholders.