Another Eagan Co. Looking To Go Public
Transport America hopes to raise $75 million in an initial public offering (IPO), there have only been two Minnesota companies to complete IPOs in 2013—one of which was also based in Eagan.
According to a Tuesday filing with the U.S. Securities and Exchange Commission (SEC), the trucking and logistics company intends to use the IPO proceeds to pay a $7.6 million debt it owes to its largest shareholder, Transport Investors. The company then plans to use some of the remaining proceeds to help pay off 62 equipment financing notes equaling $46.4 million, and $136 million in debt and capital leases related to revenue equipment financing it owes various banks and other financial institutions.
The company has applied for the Nasdaq symbol “TRAM,” but the number of shares and the offering price haven’t been determined.
Beyond paying off its debts, the company said it believes the money could go toward purchasing other companies.
“We have created standardized processes and a scalable infrastructure, which we believe can support significantly larger operations and additional acquisitions with minimal incremental investment,” the company said in its filing. “We believe the benefits of access to capital provided by this offering position us to accelerate our growth through a combination of internal expansion and strategic acquisitions.”
Transport America provides for-hire truckload transportation and said it operates a “modern technology-enabled fleet” of about 1,500 tractors, 4,440 trailers, and a network of 12 terminals. According to the SEC filing, the company’s most recent annual revenue totaled $364 million, and its profits totaled almost $4 million, for 2012.
In January 2011, Transport America acquired Birmingham, Alabama-based Southern Cal in what it called “one of the largest asset-based truckload acquisitions” made in the industry, for an undisclosed sum.
Transport America said that during 2012 it added 75 new customers, which collectively contributed more than $31 million in revenues. In the filing, the company said its IPO would help attract new customers.
“We believe our larger size and broader service offering relative to smaller competitors and increased financial strength as a result of this [IPO] will enable us to accelerate our growth,” the company said.
Transport America follows just four other Minnesota companies to file for an IPO in two years. Most recently, Eagan-based cabinet manufacturer Norcraft Companies filed to raise $100 million through an IPO in October, and Plymouth-based biotech company BioAmber filed to raise $136 million through an IPO in May.
Only two locally based companies completed traditional IPOs in 2012. 2011 and 2010 also saw two IPOs each, outpacing 2009, when there was only one, and 2008, when there were none.
While Minnesota has seen a slight increase in IPOs over the last few years, the country as a whole has seen a recent spate of IPO activity.
According to a survey released last summer by New York-based financial advisory firm Pricewaterhouse Coopers, IPO activity jumped by 82 percent throughout the United States in the second quarter of 2013. The amount of IPOs listed on U.S. stock exchanges totaled 62 for the quarter, up from 34 listings in the first quarter of the year, and up 88 percent from 33 listings in the second quarter of 2012.
Twin Cities Business reported in October that the national investment community expects an uptick in IPOs, but Minnesota investors were less optimistic.
A thriving financial community is key for businesses to advance from start-up levels to eventually filing an IPO. When Norcraft announced it would file for an IPO, Brad Allen, an investor relations expert from Minneapolis-based consultancy KC Associates, told Twin Cities Business that Minnesota has been slowly drawing back the financial community that it lost during the early 2000s, which he said would help promote IPO activity.
While the east and west coasts have been more successful in drawing companies most likely to be involved with IPOs, like technology businesses, Allen said there’s no magic in terms of IPO geography and that it’s as simple as good companies with access to capital that will attract IPOs.