TAMPA, Fla., Dec. 7 /PRNewswire-FirstCall/ -- Quality Distribution, LLC, the wholly owned subsidiary of Quality Distribution, Inc. (NASDAQ:QLTY) ("QDI"), and its wholly owned subsidiary, QD Capital Corporation (together, the "Company"), today announced their intent to offer, through a private placement, $50,000,000 aggregate principal amount of Senior Floating Rate Notes due 2012, Series B (the "Additional Notes"), subject to market and other conditions. The Additional Notes will be in addition to, but not part of the same series as, the Company's outstanding $85,000,000 aggregate principal amount of Senior Floating Rate Notes due 2012 issued on January 28, 2005 (the "Original Notes").
(Logo: http://www.newscom.com/cgi-bin/prnh/20041104/FLTH034LOGO ) Consummation of the Additional Notes offering will occur concurrently with, and is conditioned upon, consummation of the acquisition by QDI of Boasso America Corporation ("Boasso"), which was announced August 2, 2007. The Company intends to use the proceeds of the offering, along with cash on hand, amounts drawn under a new senior secured asset-based loan revolving facility with a maturity of five and one half years (described below) and a $2.5 million promissory note (the "Boasso Note") to (i) consummate the acquisition of Boasso, (ii) refinance their existing senior secured credit facility and (iii) pay related fees and expenses.
Upon completion of the Additional Notes offering, the Company will enter into a new senior secured asset-based loan revolving facility with a maturity of five and one half years (the "ABL Facility") with Credit Suisse, Cayman Islands Branch, Credit Suisse Securities (USA) LLC and General Electric Capital Corporation. The ABL Facility will consist of a $195.0 million current asset tranche and a $30.0 million fixed asset tranche, with the total commitments under the fixed asset tranche to be reduced, and the total commitments under the current asset tranche correspondingly increased, by $5.0 million on each of the second and third anniversaries of the closing date of the ABL Facility. It will be used, together with the proceeds from the offering, to finance a portion of the Boasso acquisition (which amounts will include the refinancing of substantially all existing indebtedness of Boasso), to repay all outstanding indebtedness under the Company's existing credit facility and, going forward, for working capital needs and general corporate purposes, including permitted acquisitions.
The Additional Notes will be offered within the United States only to qualified institutional buyers pursuant to rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside the United States, only to non-U.S. investors in reliance on Regulation S.
The Additional Notes to be offered will not be registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or a solicitation of an offer to buy the Additional Notes.
Headquartered in Tampa, Florida, QDI, through its subsidiary, Quality Carriers, Inc., and through its affiliates and owner operators, provides bulk transportation and related services. QDI also provides tank cleaning services to the bulk transportation industry through its QualaWash(R) facilities. QDI is an American Chemistry Council Responsible Care(R) Partner and is a core carrier for many of the Fortune 500 companies that are engaged in chemical production and processing.
This release contains certain forward-looking information that is subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995 and is subject to certain risks and uncertainties that could cause actual results to differ materially from those expected or projected in the forward-looking statements. Without limitation, these risks and uncertainties include QDI's substantial leverage; economic factors; downturns in customers' business cycles or in the national economy; the cyclical nature of the transportation industry; claims exposure and insurance costs; adverse weather conditions; dependence on affiliates and owner- operators; changes in government regulation including transportation, environmental and anti-terrorism laws; QDI's environmental remediation costs; fluctuations in fuel pricing or availability; increases in interest rates; changes in senior management; its ability to achieve projected operating objectives and debt reduction in 2007; its ability to successfully integrate acquired businesses or integrate affiliate businesses converted to QDI- controlled operations; and QDI's ability to attract and retain qualified drivers. In addition, difficulties or delays in consummating the offering of the Additional Notes, the proceeds of which will be used, along with cash on hand, amounts drawn under the ABL Facility and the Boasso Note to (i) consummate the acquisition of Boasso, (ii) refinance the Company's existing senior secured credit facility and (iii) pay related fees and expenses, could cause QDI's results to differ materially from current expectations. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors, contained in the QDI's Annual Report on Form 10-K for the year ended December 31, 2006 and its quarterly reports on Form 10-Q, as well as other periodic reports filed with the Securities and Exchange Commission. QDI disclaims any obligations to update any forward-looking statement as a result of developments occurring after the date of this release.
Contact: Timothy B. Page
Senior Vice President and Chief Financial Officer
800-282-2031, ext. 7376 Summary Financial Information of Quality Distribution, Inc.
The following table sets forth summary historical financial information, and other historical financial data of Quality Distribution, Inc. ("QDI"). The consolidated financial position and results of operations of QDI are substantially the same as the Company's. The historical statement of operations data for the fiscal years ended December 31, 2004, 2005 and 2006 and the historical balance sheet data as of December 31, 2005 and 2006 are derived from and should be read in conjunction with, the audited financial statements and related notes appearing in QDI's Form 10-K filed March 14, 2007 and the unaudited financial statements and related notes appearing in QDI's Forms 10-Q filed May 9, 2007, August 9, 2007 and November 8, 2007. The historical statement of operations data and other data for the nine months ended September 30, 2006 and September 30, 2007 are derived from QDI's unaudited financial statements which, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the data for the period. The statements of operations data for the twelve months ended September 30, 2007 was calculated by summing the audited financial information for the year ended December 31, 2006 and the unaudited financial information for the nine months ended September 30, 2007, and deducting from the subtotal the unaudited financial information for the nine months ended September 30, 2006. The results of operations for the interim period are not necessarily indicative of the operating results for the entire year or any future period.
Twelve
Months
Nine Months Ended
Ended September
Year Ended December 31, September 30, 30,
2004 2005 2006 2006 2007 2007
(in thousands)
STATEMENT OF
OPERATIONS DATA:
Operating revenues $622,015 $678,076 $730,159 $559,056 $564,986 $736,089
Operating expenses:
Purchased
transportation 420,565 471,238 493,686 380,363 358,027 471,350
Depreciation and
amortization 22,493 16,714 15,710 11,661 12,562 16,611
Other operating
expenses 163,893 150,299 172,313 128,525 166,477 210,265
Operating income 15,064 39,825 48,450 38,507 27,920 37,863 Interest expense,
net (22,343) (26,712) (29,388) (21,798) (22,830) (30,420)
Write-off of debt
issuance costs - (1,110) - - - -
Other (expense) income (857) 222 (888) 262 638 (512) Income (loss) before
taxes (8,136) 12,225 18,174 16,971 5,728 6,931
Provision for (benefit
from) income taxes 2,421 352 (36,033) (31,070) 2,229 (2,734) Net income (loss) (10,557) 11,873 54,207 48,041 3,499 9,665
Preferred stock
dividends and
accretions (145) - - - - - Net income (loss)
attributable to
common
stockholders $(10,702) $11,873 $54,207 $48,041 $3,499 $9,665
Twelve
Months
Nine Months Ended
Ended September
Year Ended December 31, September 30, 30,
2004 2005 2006 2006 2007 2007
(dollars in thousands)
OTHER DATA:
Cash paid for
interest $19,293 $24,645 $27,034 $17,139 $19,055 $28,835
Net cash provided by
operating activities 15,467 8,060 27,126 16,017 11,340 22,449
Net cash used in
investing activities (7,603) (15,084) (9,481) (10,732) (5,261) (4,010)
Net cash (used in)
provided by financing
activities (6,070) 5,858 (12,474) (2,998) (2,998) (11,556)
Consolidated EBITDA
(as defined)(1) 51,697 57,276 63,022 51,673 44,011 55,360
Combined Consolidated
EBITDA, as adjusted
(as defined)(2) 66,480
Pro forma cash
interest expense 31,981
Ratio of Combined
Consolidated EBITDA,
as adjusted (as defined)
to pro forma cash
interest expense 2.08x
Number of terminals
at end of period(3) 161 165 165 165 162
Number of tractors
operated at end of
period(4) 3,550 3,539 3,829 3,690 3,775
Number of trailers
operated at end of
period(5) 6,723 7,461 7,769 7,709 7,518
As of September 30,
2007
(in thousands)
BALANCE SHEET DATA:
Working capital(6) $ 68,595
Total assets 426,987
Total indebtedness, including current maturities 278,449
(1) Consolidated EBITDA (as defined) for QDI represents net income (loss)
before interest expense, provision (benefit) for taxes, depreciation
and amortization, write-offs, expenses and settlement costs related to
the class action settlement with respect to our subsidiary, Power
Purchasers, Inc. ("PPI"), legacy environmental reserves, insurance
recoveries, employee related non-cash compensation, costs for
severance and relocation related to putting our new management team in
place in late 2004 and early 2005, the write-off of deferred financing
charges and costs related to a secondary offering, gains on the sale
of real estate, non-cash charges related to the impairment of property
and equipment and corporate office relocation costs. Consolidated
EBITDA (as defined) is presented herein because it is an important
component of the covenant test that is used in the indenture governing
the notes. QDI presents Consolidated EBITDA (as defined) because it
(when combined with the Consolidated EBITDA (as defined) for Boasso,
and as adjusted to include certain adjustments relating to operation
of the combined companies after the Boasso acquisition) will be used
in the indenture for the Additional Notes to determine whether the
Company may incur additional indebtedness. Consolidated EBITDA (as
defined) is not a measure of financial performance or liquidity under
United States generally accepted accounting principles ("GAAP"). Accordingly, while Consolidated EBITDA (as defined) is an important
component of the indenture relating to the Company's Original Notes
and the Additional Notes, Consolidated EBITDA (as defined) should not
be considered in isolation or as a substitute for consolidated
statement of income and cash flow data prepared in accordance with
GAAP as an indication of QDI's operating performance or liquidity. The following table presents the calculation of Consolidated EBITDA
(as defined) (in thousands) for QDI: Twelve
Months
Nine Months Ended
Ended September
CONSOLIDATED EBITDA Year Ended December 31, September 30, 30,
(AS DEFINED) 2004 2005 2006 2006 2007 2007
Net income (loss) $(10,557) $11,873 $54,207 $48,041 $3,499 $9,665
Interest expense,
net 22,343 26,712 29,388 21,798 22,830 30,420
Provision (benefit)
for income taxes 2,421 352 (36,033) (31,070) 2,229 (2,734)
Depreciation and
amortization 22,493 16,714 15,710 11,661 12,562 16,611
EBITDA 36,700 55,651 63,272 50,430 41,120 53,962 PPI related write-off,
expenses and
settlement costs 6,202 (51) (1,658) (1,658) - -
Insurance recoveries (683) (2,867) (708) - - (708)
Legacy environmental
reserve adjustments 4,857 650 2,180 645 1,405 2,940
Employee non-cash
compensation 609 1,077 3,005 2,256 1,227 1,976 Severance and relocation
expenses related to
new management team 1,089 1,631 - - - -
Impairment on property
and equipment 2,923 75 270 - - 270
Deferred financing
cost write-off - 1,110 - - - -
Secondary offering
expenses write-off - - 985 - - 985
Gain on sale of real
estate - - (4,324) - - (4,324)
Corporate office
relocation costs - - - - 259 259 Consolidated EBITDA
(as defined) $51,697 $57,276 $63,022 $51,673 $44,011 $55,360
(2) Combined Consolidated EBITDA (as defined) represents the summation of
QDI's Consolidated EBITDA (as defined) for the twelve month period
ended September 30, 2007 and Boasso's Consolidated EBITDA (as defined)
for the fiscal year ended March 31, 2007. Information for Boasso for
the twelve month period ended September 30, 2007 that complies with
GAAP is not available. Based on the internal management reports
available to QDI, QDI does not believe that the Boasso Consolidated
EBITDA (as defined) for the twelve month period ended September 30,
2007 will be materially worse than for its fiscal year ended March 31,
2007, but there can be no assurances that this will be the case once
QDI receives GAAP compliant information. The following table presents the calculation of Consolidated EBITDA (as defined) (in thousands) for Boasso: Year Ended March 31,
BOASSO CONSOLIDATED EBITDA (AS DEFINED)(a) 2005 2006 2007 Net income $1,181 $1,776 $3,419
Interest expense, net 127 141 142
Provision for income taxes 657 308 2,035
Depreciation and amortization 1,008 1,050 1,181
Expenses related to principal shareholder 2,237 2,092 1,225
Insurance loss and damage claims - - 1,100 Consolidated EBITDA (as defined) $5,210 $5,367 $9,102
(a) Consolidated EBITDA (as defined) for Boasso represents net income
before interest expense, provision for taxes, depreciation and
amortization, expenses primarily related to the principal
shareholder of Boasso, who will no longer be actively involved after
the Boasso acquisition, and for the fiscal year ended March 31, 2007
expenses related to two accidents which occurred in 2000, that are
not expected to be covered by insurance, as the insurance carrier is
in receivership. For a discussion of the uses and limitations of
Consolidated EBITDA (as defined) see footnote (1) above. Combined Consolidated EBITDA, as adjusted (as defined) is not
calculated in accordance with GAAP and is not a pro forma measure
prepared in compliance with Article 11 of the SEC's Regulation S-X. QDI has not prepared pro forma financial information giving effect
to the transaction in compliance with Article 11, although QDI will
be required to do so within 75 days after closing the Boasso
acquisition to comply with SEC requirements. While QDI does not
expect that the pro forma adjustments will be material (other than
an increase in depreciation and amortization expense to reflect
purchase accounting adjustments and an increase in interest expense
to reflect the notes offering and the use of borrowings under the
ABL Facility to finance the acquisition) compared to the Combined
Consolidated EBITDA, as adjusted (as defined) information of QDI and
Boasso presented herein, actual adjustments could be material. The following table presents the calculation of Combined
Consolidated EBITDA, as adjusted (as defined) (in thousands). 2007 (b)
QDI Consolidated EBITDA (as defined) $55,360
Boasso Consolidated EBITDA (as defined) 9,102
Adjustments(c) 2,018
Combined Consolidated EBITDA, as adjusted (as defined) $66,480
(b) QDI Consolidated EBITDA (as defined) represents the twelve months
ended September 30, 2007 and Boasso Consolidated EBITDA (as
defined) represents the fiscal year ended March 31, 2007. (c) Includes adjustments based on management estimates related to (i)
the reduction in insurance expense (in a net amount of $1.4
million) that would have resulted had Boasso been part of the QDI
insurance plan compared to the amount of deductibles and premiums
paid by Boasso under its plan during its fiscal year ended March
31, 2007 (based on a third party analysis of QDI's insurance
expenses during the twelve months ended September 30, 2007), and
(ii) the elimination of certain professional fees (in a net amount
of $0.6 million) paid by Boasso during its fiscal year ended March
31, 2007 after the consummation of the Boasso acquisition. Actual
insurance costs in future periods will depend upon changes in
levels of premiums, deductibles and claims, and may be different
than assumed. The actual timing and amount of reduction in expenses
may be different than assumed and no assurance can be given as to
actual results. In addition to these adjustments, management has
identified other potential synergies that are not reflected above,
including savings from terminal consolidations, overhead reduction
and other synergies that are expected to result from the Boasso
acquisition. (3) Excludes transload facilities but includes tank wash facilities. (4) Excludes tractors held as inventory. (5) Excludes trailers held-for-sale. (6) Working capital consists of current assets minus current liabilities. Summary Financial Information of Boasso America Corporation
The following table sets forth summary statement of operations data of Boasso.
Year Ended March 31,
2005 2006 2007
(in thousands)
STATEMENT OF OPERATIONS DATA:
Operating revenues $54,440 $60,571 $70,378
Operating expenses:
Direct cost of revenues 35,451 40,365 47,080
General and administrative expenses 16,016 16,443 16,521
Depreciation and amortization 1,008 1,050 1,181 Operating income 1,965 2,713 5,596
Interest expense, net (127) (141) (142)
Income before taxes 1,838 2,572 5,454
Provision for income taxes 657 308 2,035
Net income before extraordinary loss 1,181 2,264 3,419
Extraordinary loss, net of tax - 488 -
Net income after extraordinary item $1,181 $1,776 $3,419
http://www.newscom.com/cgi-bin/prnh/20041104/FLTH034LOGO http://photoarchive.ap.org/ DATASOURCE: Quality Distribution CONTACT: Timothy B. Page, Senior Vice President and Chief Financial Officer of Quality Distribution, +1-800-282-2031, ext. 7376 Web site: http://www.qualitydistribution.com/
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