Baker Street Capital and Stone House Capital Partners, the two largest shareholders in USA Truck, have joined to form United Shareholders for the Benefit of USAK, an entity that controls 28 percent of the company's stock.
More than 2.95 million shares, with a value of more than $37 million, are owned by the group, according to a Tuesday filing with the Securities and Exchange Commission. United Shareholders for the Benefit of USAK said in the filing that the group could seek to engage company management, the board of directors and other stockholders to discuss topics including company operations and the structure of the board and ownership. USAK is USA Truck's stock trading symbol.
Additional discussions could focus on plans for USA Truck's future and the purchase of additional shares in the company.
Stone House, managed my Mark Cohen of New York, owns 14.7 percent of the company's stock, or 1.55 million shares. Baker Street, managed by Vadim Perelman, owns 13.3 percent or 1.4 million shares of the Van Buren-based trucking and transportation company.
Forming a unified group of shareholders is rare, Stephens Inc. transportation analyst Brad Delco said. It is clear from the filing that the group is seeking to influence the direction of USA Truck, he said. It's how the shareholders hope to wield their collective influence that is unclear, he said.
"They now control 28 percent of the company. I feel like they can certainly exhibit a lot more power, and it seems likely they want to sort of direct the business in a manner that will extract the most in terms of shareholder value," Delco said. "I have not seen this before. It seems pretty rare. I think there is clearly an agenda, and I'm not quite sure what it is. They're seeking something they believe is in the best interest of the shareholders."
USA Truck board members voted in April to end a shareholders-rights agreement that would discourage the ownership of more than 15 percent of the company's stock by a single entity. After the termination of that agreement, United Shareholders for the Benefit of USAK formed "to communicate with management" regarding the composition of the board, operating results and available opportunities to enhance shareholder value.
Board members had implemented the plan in November 2012 to combat an unwanted takeover of USA Truck. Knight Transportation attempted to acquire its competitor in September 2013, but has since entered into a standstill agreement that prevents it from purchasing additional USA Truck shares. Knight also is prohibited from attempting to influence the makeup of the board of directors or company management.
Attempts to reach Perelman, Cohen and USA Truck were unsuccessful.
Stone House disclosed in a February filing with the SEC that it had been in contact with USA Truck executives to discuss the company's future. "Operations, business, strategies and strategic direction" were among the discussions. Stone House also spoke with USA Truck management about "strategic combinations given the accelerating pace of consolidation in the truckload and freight brokerage industries."
USA Truck's freight brokerage division, SCS, was the top performer for the company during the first quarter of 2014. SCS reported $37.4 million in revenue, a 49 percent jump from the same period last year. CEO John Simone cautioned at the time that a similar performance was not expected in the second quarter.
Overall results for the first quarter were an improvement from 2013, but USA Truck still reported a loss for the 11th-straight quarter. During the first three months of 2014, the company trimmed its losses to $1.6 million and revenue improved 12 percent to $117.6 million.
Shares of the stock have performed well since Knight's acquisition attempt was made public in the fall, ending Tuesday trading at $17.08. USA Truck stock has traded between $5.28 and $19.57 over the past 52 weeks.
USA Truck will hold its annual shareholders meeting May 23 at company headquarters.
Stone House Capital's nearly 15 percent ownership should have been more than enough to get the attention of USA Truck executives and board members, Delco said. A group representing a 28 percent stake would represent "a larger voice."
"They already bad a big voice," Delco said. "This is even bigger."
Business on 05/07/2014