But despite selling shares at $11.50, the stock is currently trading around 13.30, down only 8.6% on the day. The reason is largely because the transaction got Saia's lenders off its back. Saia used all the proceeds from the stock offering to (as required) prepay interest and principal. While it would seem this transaction doesn't do much for the company's liquidity situation, it actually does.
The changes to their credit agreement:
While the reduction in the credit agreement's borrowing capacity sounds bad, and the interest rate has jumped huge on the senior notes, the relaxation of covenants and leverage restrictions will give Saia some room to continue improving its balance sheet, also helped by improved operating metrics.
In conjunction with the equity offering, Saia also lowered earnings guidance significantly, now anticipating a loss of 33cents versus the street's expectation of -12cents. Much of this is thanks to higher healthcare costs, up almost $2million in the 4th quarter, despite a headcount reduction of 10%!
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