Knight Transportation Proposes to Acquire USA Truck for $9.00 Per Share in Cash

  Knight Transportation Proposes to Acquire USA Truck for $9.00 Per Share in
  Cash

    Proposal Provides USA Truck Shareholders with Substantial Premium and
                             Immediate Cash Value

    Transaction Would Complement Knight’s Existing Operations and Solidify
Knight’s Position as a Premier North American Transportation Services Company

 Knight Files Schedule 13D Disclosing Approximately 8% Ownership Stake in USA
                                    Truck

Business Wire

PHOENIX -- September 26, 2013

Knight Transportation, Inc. (NYSE:KNX)(“Knight”), one of North America’s
largest and most diversified truckload transportation companies, today
announced that it has proposed to acquire all of the outstanding shares of USA
Truck, Inc. (NASDAQ:USAK) for $9.00 per share in cash, valuing the equity of
USA Truck at approximately $95 million. The total value of the proposed
transaction is approximately $242 million, including USA Truck’s approximately
$147 million of outstanding net indebtedness. The proposal represents a
significant premium of approximately 39% to USA Truck’s closing price on
September 25, 2013, the last trading day prior to this announcement; a premium
of approximately 50% to USA Truck’s average closing price for the ten trading
days preceding this announcement; and a premium of approximately 58% to USA
Truck’s closing price on August 27, 2013, the last trading day prior to
Knight’s August 28, 2013, proposal letter to USA Truck’s Board of Directors.

Knight also announced today that it has filed a Schedule 13D with the U.S.
Securities and Exchange Commission disclosing ownership of 829,946 shares of
USA Truck common stock, representing approximately 8% of USA Truck’s shares
outstanding.

“We are confident that USA Truck shareholders will share our strong belief
that Knight’s $9.00 per share all-cash, premium proposal would provide
significant and immediate cash value that is significantly more attractive
than USA Truck’s standalone prospects,” said Kevin Knight, Chairman and Chief
Executive Officer of Knight. “For Knight’s shareholders, we are confident that
a combination with USA Truck would create value by further enhancing our
position as a leading provider of multiple truckload transportation services
in North America. Today Knight is well positioned to gain market share by
leveraging our services, technology, relationships and service center network,
and we are confident that the proposed transaction would further accelerate
our growth.

“Knight and USA Truck operate in complementary service lines, and this
proposed transaction would create an operationally and financially stronger
transportation company that is better positioned to deliver value for all of
our stakeholders,” continued Mr. Knight. “Our company has a demonstrated
history of operational excellence, and we believe that we can meaningfully
increase the financial performance of USA Truck’s operations. Knight is ready
and willing to complete this transaction, and we are prepared to take the
necessary steps to realize the benefits inherent in this proposed combination.

“We look forward to the opportunity to engage constructively with USA Truck’s
Board to discuss our proposal and to agree upon the terms of a transaction
that is beneficial for both companies and all of our stakeholders. Although we
believe our current proposal would provide full and fair value to USA Truck
shareholders, we would be prepared to modestly increase our proposed purchase
price if additional value is identified during the due diligence process,” Mr.
Knight concluded.

Knight believes that there are compelling strategic and financial benefits for
a combination of the two companies, including:

  *The $9.00 per share all-cash proposal represents a significant premium to
    USA Truck’s current share price and would provide shareholders with
    immediate value and liquidity for their shares;
  *Knight’s proposal would eliminate the significant execution risk of USA
    Truck’s turnaround plan and reverse the erosion of value stemming from
    eight consecutive quarters of USA Truck net losses aggregating
    approximately $30 million or approximately $3 per USA Truck share;
  *Knight’s proposal would liberate USA Truck shareholders from selling
    constraints imposed by USA Truck’s illiquidity, as evidenced by its
    average daily trading volume of only approximately 11,000 shares during
    the three month period ending September 25, 2013;
  *Knight can finance USA Truck’s capital needs on a lower cost basis,
    reducing the risk to meeting the business’ ongoing capital obligations;
    and
  *The transaction is expected to be accretive to Knight’s expected earnings
    per share in 2014 and beyond. Knight’s consolidated operating ratio for
    the six months ended June 30, 2013, was 85.3%, compared with USA Truck’s
    consolidated operating ratio of 101.7% during the same period, and Knight
    expects to realize considerable operational improvements at USA Truck.

Below is the text of the letter that was sent on August 28, 2013, to USA
Truck’s Board of Directors:

August 28, 2013

Board of Directors
USA Truck, Inc.
3200 Industrial Park Road
Van Buren, AR 72956
Attn: Robert A. Peiser

Gentlemen:

As you know, Knight Transportation, Inc. (“Knight”, “we”, “our”, or “us”) has
invested significant time and effort to advance a Knight / USA Truck
combination. We are writing this letter to share our frustration with USA
Truck’s unwillingness to constructively engage with us regarding our interest
in a transaction while at the same time communicating directly to the Board of
USA Truck the significant value we would propose to pay for the USA Truck
shares as well as our rationale for a combination.

Based on an extensive analysis we have performed of the Company’s publicly
disclosed information, at this time we are prepared to acquire all of the
outstanding shares of common stock of USA Truck for an all-cash purchase price
of $9.00 per share. This proposed purchase price reflects a significant
premium equating to approximately 58% to USA Truck’s closing price of $5.69 on
August 27, 2013. Our proposal would provide your shareholders with immediate
liquidity for their shares at an attractive price, without being subject to
the significant execution risk associated with your current turnaround plan.
We would note that although the Company’s operational performance has
improved, the Company’s operating ratio remains above 100%, its book value
continues to fall, and the share volume remains quite limited, making it
difficult for your shareholders to achieve liquidity.

Although we believe our proposal would provide full and fair value to your
shareholders, we would be prepared to modestly increase our proposed purchase
price if we were allowed to conduct due diligence and the Company were to
demonstrate to us value that we have not already identified.

We believe there would be no impediment to completing a transaction on an
expedited basis. Based on discussions we have had with our potential financing
sources, we are confident that we would be able to readily obtain the
financing necessary to complete a transaction. As such, our proposal is not
subject to any financing contingency. Moreover, based on our knowledge of the
trucking industry, we do not believe there would be any antitrust impediment
to completing a transaction.

Knight’s interest in a Knight / USA Truck combination is motivated by our
belief that there is a compelling strategic rationale for a combination of our
two companies:

  *Knight and USA Truck operate in complementary service lines, both with
    young tractor fleets with similar average lengths of haul.
  *Knight and USA Truck share similar positive cultures: Both the Knight and
    USA Truck teams are hard-working, ethical, dedicated, family-oriented and
    committed to providing quality service to customers.
  *Knight believes that it can improve operational efficiencies at USA Truck
    – and do so more quickly than the USA Truck management team can alone.
  *Knight can finance USA Truck’s capital needs on a lower cost basis.

This letter is not a binding offer, and there will be no binding agreement
between us or any commitment or obligation on either party with respect to a
potential transaction unless and until a definitive agreement is executed by
Knight and USA Truck. Knight’s proposal is subject to customary conditions,
including, among other things, Knight’s satisfaction with the results of due
diligence in Knight’s sole discretion, the negotiation of a mutually
satisfactory definitive agreement, and the approval of the negotiated terms of
a transaction by Knight’s Board of Directors.

We are prepared to meet with members of the Board of Directors to discuss any
aspect of our proposal and believe there could be a transaction with Knight
that would be viewed as highly favorable by your shareholders.

We kindly request that by September 6, 2013, the USA Truck Board of Directors
formally: (i) affirm to Knight a willingness to constructively advance
discussions towards a transaction, or (ii) communicate to Knight a lack of
willingness to constructively advance discussions. Absent a satisfactory
response, we will consider all options available to us, including making your
shareholders aware of our offer.

We look forward to hearing back from you.

Very truly yours,

Kevin P. Knight
Chairman and CEO
Knight Transportation, Inc.

Knight’s proposal is subject to the satisfaction of customary closing
conditions. The proposed transaction is not subject to any financing
condition. Knight has significant financial flexibility to acquire all of the
outstanding shares of USA Truck and to assume or refinance USA Truck’s
existing indebtedness. With USA Truck’s cooperation, it is anticipated that
the proposed transaction could close as early as the fourth quarter of 2013.

Evercore is acting as financial advisor to Knight and Fried, Frank, Harris,
Shriver & Jacobson LLP is acting as Knight’s legal advisor.

About Knight Transportation

Knight Transportation, Inc. is a provider of multiple truckload transportation
services using a nationwide network of service centers in the U.S. to serve
customers throughout North America. In addition to operating one of the
country’s largest tractor fleets, Knight also partners with third-party
equipment providers to provide a broad range of truckload services to its
customers while creating quality driving jobs for our driving associates and
successful business opportunities for owner-operators.

Forward-Looking Statements

Some statements set forth in this press release, including those regarding
Knight’s proposal to acquire USA Truck and the expected impact of an
acquisition of USA Truck on Knight and its financial results and operations,
contain forward-looking statements that are subject to change. Statements
including words such as “believe”, “expect”, or similar words as well as
statements in the future tense are forward-looking statements. These
forward-looking statements are subject to risks and uncertainties that could
cause actual events or actual future results to differ materially from the
expectations set forth in the forward-looking statements. Some of the factors
which could cause results to differ materially from the expectations expressed
in these forward-looking statements include the following: the possibility
that an acquisition of USA Truck by Knight may not be completed; the risk
that, if the acquisition is completed, Knight may face difficulty or be unable
to enhance the performance of USA Truck’s operations or successfully integrate
USA Truck’s operations; and other factors identified from time-to-time in
Knight’s filings with the Securities and Exchange Commission. All
forward-looking statements in this press release are qualified by these
cautionary statements and are made only as of the date of this news release.

Contact:

Knight Transportation, Inc.
Dave Jackson, President / Adam Miller, CFO
602-606-6349
or
Joele Frank, Wilkinson Brimmer Katcher
Andrew Siegel / Eric Brielmann / James Golden
212-355-4449
 
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