Liberate Announces Offer to Buy USA TRUCK
29 September 2006 - 3:26AM
PR Newswire (US)
Cash Offer of $21 Per Share PALO ALTO, Calif., Sept. 28
/PRNewswire-FirstCall/ -- Liberate Technologies announced today
that it had offered $21 per share to acquire USA Truck, Inc.
(NASDAQ:USAK) subject to terms and conditions set forth in the
attached letter. September 28, 2006 Jerry D. Orler President,
Director USA Truck, Inc. 3200 Industrial Park Road, Van Buren, AR
72956 Dear Jerry, We are writing to express publicly what we have
told you privately over the past months. By putting on paper our
proposal and intentions, we hope to clearly state our offer and
break the current impasse in our discussions. We appreciate the
constructive dialogue over the past months and your timely response
to our questions. We also appreciate the directness with which you
personally have communicated with us and the willingness to
consider our viewpoints. We admire your excellent management team
and workforce, and have offered to acquire the company for $21 per
share in cash, which is a 22% premium to the current share price.
This offer is based on our extensive analysis of USAK utilizing
publicly available information, but is necessarily subject to
confirmation through due diligence. We are prepared to proceed
immediately with our confirmatory due diligence review and
negotiation of definitive documentation on mutually acceptable
terms. In addition to the equity supplied by Liberate and
affiliates, we have proposals from two separate banks to provide
financing sufficient to consummate the proposed transaction. To
date, the company's response to our initial offer has been that it
is insufficient, and, therefore, the company has refused to discuss
the details of our proposal or to allow us to conduct due
diligence. The company has, in fact, even been unwilling to give us
guidance as to what might constitute a sufficient offer to begin
discussions. We ask that you reconsider our offer. If you believe
the company is worth more than $21 per share, we would welcome a
fuller process that could permit us to validate that higher value
and to deliver the best deal possible for all shareholders. If the
company were to permit us to conduct due diligence, we may be able
to offer a higher price. As we have told you in the past, we are
very impressed by the terrific job the USAK management team has
done in managing the operations of the company. We believe that
USAK is one of the best run trucking companies in the United
States, with strong, experienced senior leaders and a terrific
group of young executives coming up through the ranks. There is no
stronger evidence of this team's capabilities than the dramatic
improvement in operating ratios: 88 percent in the most recently
reported period, after hovering in the mid 90's for years. More
impressively, these margin gains have been realized while the
company has continued to grow revenues and increase its market
share. The company's financial structure, however, does not do
justice to its operational excellence. In short, USAK should be a
private company. The costs -- Sarbanes-Oxley, accounting,
compliance, financial reports, proxies, directors and tax on
management time and effort -- exceed the benefits of a public
company structure. Furthermore, the next generation of management
should receive a significant equity stake in the business, without
the constraints of public company compensation. And the short-term
focus of the public market today, especially among certain investor
groups, can pull management away from the right strategic decisions
-- ones that have immediate pain, but future gain -- such as the
company's reported pre-purchase of trucks this year ahead of the
2007 emissions regulations. Although that pre-purchase drove up
unseated capacity, which has contributed to the recent dramatic
fall in share price, we believe that this acceleration of capital
expenditure will not only cut cash outlays next year, but will also
pay generous dividends in lower operating costs in the years ahead.
USAK also has substantial unused debt capacity. Despite having a
balance sheet packed with largely unencumbered assets, the company
has not capitalized on the development of the asset backed and
other credit markets in recent years. For example, the company's
revenue equipment, related assets and accounts receivable in excess
of $320 million could support credit facilities of over $250
million. OEM financing for trucks is also available on potentially
even more leveraged terms. Mortgage financing for terminals and
other buildings could provide additional significant liquidity.
Given the business's strong operating margins and profitability,
the company could also draw from the second lien and high yield
markets. USAK's operational excellence is unquestioned. The
company's management, employees and stakeholders deserve a capital
structure commensurate with the excellence of the business. In view
of your initial refusal and subsequent lack of response, we have
decided to publicly announce our initial offer. I wish to assure
you, however, that we are interested in pursuing a transaction on a
consensual basis. We strongly urge the board to reconsider our
offer and request a response to this letter by October 5, 2006.
Sincerely, Philip A. Vachon President Liberate Technologies Phil
Vachon President Liberate Technologies 650-330-8960 Greg Wood CFO
Liberate Technologies 650-330-8960 DATASOURCE: Liberate
Technologies CONTACT: Phil Vachon, President, +1-650-330-8960, or ,
or Greg Wood, CFO, +1-650-330-8960, or , both of Liberate
Technologies Web site: http://www.liberate.com/
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