USA Truck Takeover Attempt Comes To A Screeching Halt

Indianapolis-based Celadon Group sold on Feb. 28 all its shares of Van Buren-based USA Truck, effectively ending a bid to buy USA Truck.

Celadon, according to its filing with the federal Securities and Exchange Commission, sold its 658,000 USA Truck shares for $4.922 million. The closing share price on Feb. 28 was $8.06, with trading on the day ranging between $8.45 and $7.50.

During the past 52 weeks the USA Truck share price has ranged from a $13.44 high to a $6.75 low.

“We are pleased Celadon has decided to put their shareholders’ capital to better use elsewhere,” said USA Truck President and CEO Cliff Beckham. “Their brief ownership of 6.3% of our stock was a distraction for our management team and a source of anxiety for our team members. We have work to do to return USA Truck to profitability, and this development will help us play a more aggressive style of offense in pursuit of that profitability.”

Celadon, which operates Celadon Trucking, purchased $4.66 million in USA Truck shares (NASDAQ: USAK) in early October 2011. Company officials also asked to meet with the USA Truck management to “discuss a possible association” between the two companies.

USA Truck officials rejected the request.

“Among other factors, the Board of Directors considered the recent management changes and the Board’s desire to remain focused on increasing value through operational improvements. Accordingly, the Board of Directors unanimously decided to decline a meeting at this time,” noted the USA Truck statement issued Oct. 21.

At risk in a possible deal would be the about 500 jobs at USA Truck’s corporate headquarters in Van Buren.

Celadon officials may have decided to pursue another transaction. The company announced Feb. 29 that it “purchased a significant portion of the operating equipment of Teton Transportation, Inc.”

The deal to buy the Knoxville, Tenn.-based trucking company could add 180 tractors and 280 trailers to the Celadon fleet. Celadon operates with about 2,800 tractors and 8,200 trailers.

BACK TO WORK
It may be an understatement by Beckham to say the company has work to do to return to profitability.

The company posted a 2011 net income loss of $10.777 million, more than triple the loss during 2010 and in a year when other trucking companies are beginning to see improved financials. Continued problems with providing service — resulting from a third quarter disaster in the implementation of new software — and the loss of two major accounts were cited as reasons for the disappointing results. The problems have also created more turnover in the company’s driver corps.

Morgan Keegan analysts Chaz Jones and Nicholas Bender wrote in a Feb. 7 research note that they downgraded USA Truck shares (NASDAQ: USAK) to “Market Perform” because the earnings report was disappointing and indicated a longer path to profitability. They estimate USA Truck could post a $3.5 million loss in 2012.

Michael Tilley with The City Wire is the author of this report. He can be reached by e-mail at [email protected].