Cliff's Announcement and Company Transition

I don't really understand corporate finance. Yes their borrowing seems to be out of control, but I guess their new lender thinks everything is OK. I will defer to them. There is a whole lot about this that I don't understand. I do know however the stock closed today a full week since at $3.71. This is down over $6 since Celadon bought and then sold over 6 million worth of it. To put this into perspective if Celadon still owned that stock it would only be worth a bit over 2 million today!

 

I am not an accountant but corporate finance doesn't really differ too much from your own finances. A company borrows based on their balance sheet and their recievables which represent services that have been rendered but have not yet been paid. However, USA didnt get this credit line based on a "strong balance sheet" as Cliff wants everyone to believe. They got it by using all their assets (equiptment and facilities) as collateral. Which means if they can't pay the payment on the credit line Wells Fargo will be the new owner of USA truck. Since they are not in the trucking business they will be looking to either sell or liquidate ASAP. This would basically be like a foreclosure. Also keep in mind that really the most Wells Fargo is putting on the line without USA having to perform is 18.75 million. After that Wells Fargo holds all the cards as to wether or not to keep extending the rest of the 125 mil. Corporate finance just uses bigger words to confuse everyone. Take the phrase "Credit Facility" just means "credit line". Nothing special.

 

Still at this point USA Truck is meeting their financial obligations. This (tanking) stock price mystifies me though.

 

hasnt sirius xm been losing money for years now but still managed to stay in business? I may be wrong

 

they got bought out by sirus

 

Sirius lost money for a long time and yes they managed to sell corp bonds and stay in business. Liberty Media loaned them money in 2009 to fend off bankruptcy so without them Sirius would have gone down. The company has managed to turn a few cents profit since then and things have only looked better for them. The difference between them and a trucking company USA truck is just another trucking company. To keep it short since this thread is about USA truck and not Sirius XM. SIRI has actually been in the black for the past 3 years and they have managed to decrease their debt and the outlook is only looking stronger these days.

 

I use to work for USA Truck but not anymore, I was talking to my trainer that I had when I was working for USA and he tells me things are not looking good. They took a $125 million dollars loan out who the hell consider loaning that much money to them.....Hopefully USA truck treat u better if they do go under unlike Arrow Trucking did to their drivers when they went under.

 

You have to read the specifics of the deal they signed with the bank. They didn't take 125 mil. They would have to meet a lot of criteria before they would unlock that full amount. Right now the only amount availiable is 18.75 mil

 

If any of you remember Cannon Express,

this story is almost an exact repeat.

It's not that anybody wants them to fail,

it's just that alot of drivers get burned when a company folds.


It's not like they give you 2 weeks notice and a nice severance package !!


That is why it's the drivers obligation to his family to be proactive,

and try to avoid those hardships caused by the closing of a company.



its not like there are no other trucking companies out there......