Swift Transportation Raises $806 Million in U.S. IPO

Swift Transportation Co., the biggest truckload carrier in North America, raised $806 million after cutting the price for the second-largest U.S. initial public offering of 2010.

The trucking company sold 73.3 million shares for $11 each yesterday, after offering 67.3 million at $13 to $15 apiece, according to data compiled by Bloomberg. The IPO raised about 20 percent less than it originally sought. Swift Transportation, which began trading today on the New York Stock Exchange under the ticker SWFT, rose 0.9 percent to $11.10.

Jerry Moyes, the co-founder of Swift who regained control in a $2.37 billion leveraged buyout in 2007, completed an IPO of the Phoenix-based company to help repay debt after it posted $678 million in losses. At the original midpoint price, Swift Transportation would have been worth about 25 percent less than the company Moyes took private, data compiled by Bloomberg show.

“There’s a lot of noise around this deal that I’m sure gave investors pause,” said Michael Yoshikami, who oversees $1 billion at YCMNet Advisors in Walnut Creek, California. “The biggest one is the fact that they’ve been continually losing money. The fact that they had to cut the price doesn’t surprise me at all.”

Morgan Stanley in New York, Bank of America Corp. of Charlotte, North Carolina, and San Francisco-based Wells Fargo & Co. led the offering.

2007 Buyout

The original midpoint price would have given Swift Transportation a market value of $1.78 billion. Moyes paid about the same amount in May 2007 for the 74 percent equity stake that he didn’t already own, according to data compiled by Bloomberg.

The company, which had 16,200 tractors and 48,600 trailers in North America as of September, posted a net loss of $77 million for the first three quarters of 2010, its filing with the Securities and Exchange Commission showed.

Moyes, 66, co-founded the trucking company in 1966 and originally took Swift public in 1990. He stepped down as chairman and chief executive officer in October 2005 after paying $1.5 million to settle an SEC case accusing him of insider trading without admitting or denying wrongdoing, the prospectus said.

The accusation related to his purchase of 187,000 Swift shares in May 2004, days before the company announced better-than-estimated earnings and the stock jumped 20 percent.

NHL Team

Moyes sold the National Hockey League’s Phoenix Coyotes to the NHL for $140 million in November 2009 after the team filed for bankruptcy protection under Chapter 11 in May of that year.

In March, the NHL sued Moyes for breach of contract, aiding and abetting breach of fiduciary duty and attempting to sell the Coyotes without NHL consent, seeking damages of at least $60 million, the prospectus said. Moyes has filed a motion to dismiss the NHL’s claims.

Dave Berry, the Swift Transportation vice president who handles press inquiries for Moyes, said the CEO wasn’t immediately available to comment.

Moyes, who graduated from Weber State University in Ogden, Utah, in 1966 with a bachelor’s degree in business administration, made $1.6 million as Swift Transportation’s CEO over the past three years, the company’s prospectus said. He was also chairman of Simon Transportation Services Inc., the trucking company that filed for bankruptcy protection in 2002.

Swift Transportation had $2.33 billion more debt than cash at the end of September and generated $341 million in earnings before interest, taxes, depreciation and amortization in the first nine months of 2010, its prospectus said.

Relative Value

That would give Swift Transportation 5.13 times more net debt than its cash flow over a full year, more than quadruple the median net debt-to-Ebitda ratio of 1.12 for 23 U.S.-traded trucking companies, according to data compiled by Bloomberg.

Neither Werner Enterprises Inc. of Omaha, Nebraska, nor Phoenix-based Knight Transportation Inc., cited as Swift Transportation’s competitors by Marina del Rey, California-based IPOdesktop.com, had any debt at the end of September, data compiled by Bloomberg show.

Separately, Swift increased the size of a term loan it’s seeking to refinance debt and expects to price it at the tight-end of its initial offering, according to two people familiar with the negotiations.

The company boosted the size of the debt by $20 million to $1.07 billion, said the people, who declined to be identified because the terms are private. Swift also increased the size of a bond offering by $10 million to $500 million after the IPO.

Loan Rate

Bank of America, Morgan Stanley and Wells Fargo are arranging the loan, which will have an interest rate 4.5 percentage points more than the London interbank offered rate, one of the people said. Swift had offered a margin of as much as

4.75 percentage points over the lending benchmark.

The company’s stock offering was originally scheduled to price on Dec. 14. The four IPOs completed that day were sold at the low end of the forecast range or reduced even as the Standard & Poor’s 500 Index traded at a two-year high.

Detroit-based General Motors Co.’s $18.1 billion sale of common shares last month was the biggest U.S. IPO this year, data compiled by Bloomberg show.

Three U.S. IPOs are scheduled for today, according to data compiled by Bloomberg. Fortegra Financial Corp., the Jacksonville, Florida-based insurance services company that attempted to raise $123 million yesterday, will now try to sell $66 million of shares after chopping its IPO by 46 percent, according to its SEC filing and data compiled by Bloomberg.

QR Energy LP of Houston plans to raise $315 million in its IPO today, while New York-based Ventrus Biosciences Inc. is selling $19.6 million of shares, the data show.

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