Roadrunner Transportation Systems Inc. (NYSE: RRTS) was a top gainer in yesterday’s trading session, and closed the day with gains of 41.34%. This came after the company announced that, it was selling its Prime Distribution Services Business to C.H Robinson Worldwide.
The company sold this part of the business as part of its efforts to improve its balance sheet. The deal is worth $225 million in cash, and the money will help shore up the balance sheet that was low on cash assets. As per the company’s 10-Q report that was filed with the SEC, the company had only $5.8 million in cash. This was significantly lower than the $11.2 million that it had in Q3 of 2018.
In the announcement that the company provided about the sale, it stated that, Prime offers a complete suite retail solution that has food-grade warehouses, located in strategic locations all across the country. The company also noted that Prime has a strong team of supply experts that are fully dedicated to helping clients comply with the needs of large U.S deliveries. The company further noted that, Prime had sales of $108.7 million in the year 2019.
It announced that it was not selling that division to build up cash reserves, but to pay off debts. According to the CEO, Curt Stoelting, divesting from Prime Distribution Services is an opportunity for the company to pay off all its debts under its ABL and Term Loan Credit Facilities. He added that the loans of about $260 million were taken in efforts to restructure the company.
Looking at its price action, RRTS is in a reversal and on high volumes. After several weeks in the red, the stock opened the day at $6.66 and rallied to a high of $9.25 before closing at $9.06. Volumes in the day stood at 206.16k.
About Roadrunner Transportation Systems Inc.
Roadrunner Transportation Systems Inc. offers asset-light transport services. It is based in Downers Grove, Illinois.