- Roadrunner Transportation Systems plans to spin off Ascent Global Logistics into an independent, privately held company, Roadrunner said Monday. The move is pending approval by the company's board of directors and other entities, but it is expected to be final in August. Frank Hurst, president of Roadrunner Freight, would become president of Roadrunner Transportation Systems.
- Roadrunner will do business as "Roadrunner Freight," which will encompass the LTL and TL businesses. The newly independent Ascent Global Logistics will include Ascent Domestic, Ascent International and Ascent On-Demand and will focus on domestic freight management and international freight freight forwarding, according to Roadrunner.
- The spinoff will help align "external financial resources, such as access to capital markets, and insurance factors, with the unique nature of each business," according to Roadrunner. The company said it expects corporate spend to be reduced between the two businesses.
Downsizing has been Roadrunner's mode of operation for months. It shed its Intermodal Services business in November, its flatbed business in December and its Stagecoach Cartage and Distribution dry van segment in April. Since last year, the company has sold more than $300 million in assets.
The carrier reported a net loss of $341 million for 2019. Revenues at Roadrunner declined by more than $50 million year over year during Q4 2019, which the company attributed primarily to Ascent, citing declines in air and ground expedited logistics and reduced shipment volumes and rates in the LTL and TL segments.
Roadrunner's financial woes date back to a 2017 accounting scandal, in which the CFO at the time was allegedly engaged in fraud, that led the company to restate several years of financial reports, according to The Wall Street Journal. Roadrunner delisted from the NYSE on March 26 and voluntarily deregistered from the reporting requirements of the Securities and Exchange Commission.
When the spinoff is complete, Roadrunner's senior secured credit facility will be terminated. The company has not yet finalized what its financial structure will be, but it expects to be capitalized "with zero debt and sufficient liquidity and flexibility to pursue future growth opportunities."
Opportunities would center on Roadrunner's strategy of becoming an asset-light LTL carrier, which could introduce competition into the LTL market if Roadrunner is able to capitalize on growth.
The company declined to comment further on the spinoff, but a spokesperson said Roadrunner expects to have more details in the next week or two.