Mark DiBlasi has been removed from his role as chief executive officer of Cudahy-based Roadrunner Transportation Systems Inc. and the company announced a new management team along with a $540 million investment from New York-based hedge fund management firm Elliott Management Corp.
Curt Stoelting, who joined the company as president and chief operating officer in early 2016, has been named chief executive officer. DiBlasi will serve as vice chairman of Roadrunner’s board on an interim basis, the company said.
Roadrunner terminated chief financial officer Peter Armbruster earlier this year amidst a review of the company’s financial results from the last few years. The company announced in January that it had discovered accounting discrepancies involving unrecorded expenses at two subsidiaries that could result in $25 million in adjustments to its results and at least a $200 million goodwill impairment charge.
The company is yet to report results from the end of 2016 as it tries to sort out its books, but said it is in the final stages of completing its financial statements and would issue them as soon as possible. Roadrunner also plans to name a new CFO in the near future.
Roadrunner also named Mike Gettle, who joined the company in 2016 as executive vice president, as its new president and chief operating officer.
Bob Milane was named as general counsel and chief compliance officer. He was hired in 2014 and recently served as executive vice president for risk management. Milane will continue to be responsible for risk management in his new role.
The company also hired Scott Cousins as chief information officer in January.
“Now that we have stable long-term financing in place, we can focus our efforts on improving our operations and pursuing new opportunities which will better allow us to serve our customers, partner with our key vendors and drive long-term value for our shareholders,” Stoelting said.
As Roadrunner has been working to sort out its financial results, the company has also had to work with its lenders to avoid defaulting on nearly $500 million in debt. Lenders twice agreed to amendments to the company’s credit facility as a longer-term deal was worked out.
Proceeds from Elliot Management’s $540 million redeemable preferred stock investment were used to pay off the company’s senior credit facility and to provide working capital for the business.
“The new preferred stock investment gives Roadrunner a strong financial platform for today and the future,” Stoelting said. “It also deepens our relationship with Elliott Management, who will now serve as a valued advisor and financial partner. We look forward to working with the team from Elliott Management in the years ahead.”
The plan is for $240 million from the investment to be replaced by new asset-based lending from commercial lending, potentially including some of the company’s previous lenders.
The remaining $300 million is structured in four series with terms of six or eight years and dividend rates between 8.75 percent and 16.50 percent. Each series effectively gives Elliott Management a 5 percent common equity economic interest in the company. Elliott already controlled 8.6 percent of Roadrunner’s common shares.
The arrangement also gives Elliott Management the right to appoint up to two board members.
“We are excited to have the opportunity to work closely with Roadrunner and its management team and by the significant opportunity to create value for shareholders over the years to come,” said Dave Miller, Elliott Management senior portfolio manager and head of U.S. restructuring.
