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USA Truck says Knight broke confidentiality agreement in acquisition bid

USA Truck recently reported total revenue of $139.7 million in the second quarter 2013, a gain of $10.2 million or 7.9 percent over the second quarter of 2012. (The Trucker file photo)

The Trucker News Services


VAN BUREN, Ark. — USA Truck said Friday it has filed a breach of contract lawsuit against Knight Transportation for, among other things, improperly using USA Truck’s confidential information to begin a creeping hostile acquisition of USA Truck at a price that the USA board has unanimously concluded does not reflect the company’s full intrinsic value.

USA Truck issued the following statement regarding the lawsuit:

“USA Truck’s Board of Directors is very disappointed that Knight is doing exactly what it promised not to use confidential information that it was provided in the context of friendly and private discussions regarding a negotiated transaction between the companies to initiate a creeping hostile takeover of USA Truck at a price that does not reflect the full intrinsic value of USA Truck,” the board said in a prepared statement. “As publicly stated USA Truck has previously offered to meet with Knight and remains open to all strategic options that reflect the full intrinsic value of USA Truck, including further discussions with Knight.”

The action, filed in the Circuit Court of Crawford County in Van Buren, alleges that Knight Transportation’s actions, including its purchasing shares of USA Truck stock, using USA Truck’s confidential information and its disclosure of the prior discussions with USA Truck are blatant violations of the confidentiality agreement between the parties and have disadvantaged the company’s other stockholders.

According to the lawsuit, Knight Transportation’s recent public statements have made clear that Knight Transportation intends to further violate the confidentiality agreement by using such confidential information to pursue a hostile takeover of USA Truck without negotiating with USA Truck’s Board of Directors.

To ensure that USA Truck’s Board of Directors can consider a proposed transaction in light of the recent initiatives undertaken by the company’s new management team and earnings growth prospects without the threat of continued share acquisitions by Knight Transportation, the lawsuit seeks to require Knight Transportation to restore a level playing field by divesting the shares it acquired in violation of the confidentiality agreement.

USA Truck recently reported total revenue of $139.7 million in the second quarter 2013, a gain of $10.2 million or 7.9 percent over the second quarter of 2012.

Increases in expenses for fuel and fuel taxes, operations and maintenance and insurance and claims drove up total operating expenses, however, resulting in a net loss for the quarter of $1.0 million. That’s an improvement over the corresponding quarter in 2012, which saw a loss of $3.5 million.

The company’s operating ratio improved to 103.8 percent from 108.8 percent a year earlier.

Overall, the news is positive, according to USA Truck President and CEO John Simone, who pointed out that the growth in operating revenue is outpacing growth in expenses.  

“We reduced our net loss by 70.0 percent, marking our second consecutive quarter of material year-over-year improvement in operating results,” he stated. “We believe our turnaround plan gained traction during the June quarter, extending the year-over-year improvements in base revenue, operating income and net loss we achieved during the March quarter. While we are encouraged by our progress,” Simone concluded, “we are not satisfied and have not yet achieved our top priorities of returning to profitability and restoring shareholder value.”

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