Less-than-truckload carrier Saia has announced a plan to sell 2.31 million shares of its common stock for $11.50 a share to certain qualified institutional buyers, a move designed to pay down debt and get relief from debt covenants.
Saia projects a fourth quarter loss of 30 to 36 cents per share.
Saia projects a fourth quarter loss of 30 to 36 cents per share.

The company expects to raise $25.1 million through the deal, using $24.5 million to prepay $17.5 million of principal and $7 million of interest due in 2010. The offering should close on or around Dec. 29, 2009, the company says.

In addition, the company modified its debt agreements to provide additional covenant relief through the first quarter of 2011.

While the company ended the third quarter of 2009 with $116.3 million in debt and a decrease in volumes, it doesn't expect the fourth quarter to be much better. The company projects a fourth quarter loss of 30 to 36 cents per share, based on the number of shares of common stock currently outstanding. This is due to weak volumes, increased health care costs and a very competitive pricing environment.

"We believe the combination of equity raised from this offering and the covenant relief from our lenders should provide us with the flexibility to manage through a continued economic downturn and respond to an industry consolidation event," said Rick O'Dell, president and CEO.

"There remains significant overcapacity in the LTL sector, as evidenced by FedEx Freight (for its November quarter) and Saia announcing operating losses to close out 2009," said David Ross, principal at Stifel Nicolaus, in a letter to investors. "If the industry's largest distressed player, YRC Worldwide, is not able to make it through the winter, Saia and other LTLs should return to profitability in 2010 and benefit significantly from additional tonnage and improved pricing."