Logistics company UTi Worldwide Inc said it had breached some debt covenants and would report a loss for the fourth quarter due to a weak air freight market, sending its shares down as much as 28 percent in early trading.
UTi said it would need to raise about $525 million to pay off debt of at least $400 million that could come due in April.
The company had about $200 million of long-term debt and about $300 million in borrowings under credit facilities as of Oct. 31, according to regulatory filings. ()
UTi said on Wednesday it would also issue $350 million in senior notes due 2019 in a private offering.
The company also would raise $175 million by issuing convertible preferred shares to its largest shareholder, P2 Capital Partners, raising P2’s stake in the company to 18.1 percent. The hedge fund currently owns about 10.76 percent of UTi, according to Thomson Reuters data.
UTi said it had received commitments from affiliates of Citigroup Global Markets Inc and Morgan Stanley & Co for a new $150 million five-year credit facility, which it expects to take up after placing the notes and preferred shares.
UTi, which had a market capitalization of about $1.6 billion as of Tuesday, said the longer-term refinancing would remove restrictive covenants.
The company estimated a loss of 33-38 cents per share and revenue of $1.05 billion to $1.10 billion for the fourth quarter ended Jan. 31. ()
Analysts had expected a profit of 6 cents per share on revenue of $1.13 billion, according to Thomson Reuters I/B/E/S.
Chief Executive Eric Kirchner said on a conference call that freight pricing remained under pressure during the quarter and that this would continue “for the foreseeable future.”
Air shipments in the United States have been falling as customers choose slower but cheaper modes of shipping, such as ocean freight.
UTi shares were down 24 percent at $11.58 in mid-morning trading on the Nasdaq.