Shares of UTi Worldwide Inc. sank nearly 30 percent Wednesday after the logistics company said it had breached debt covenants and expected to report a fourth quarter loss.
The Long Beach company plans to raise about $525 million, mainly to pay off at least $400 million in debt coming due in April.
The company will issue $350 million in senior notes due 2019 in a private offering. UTi also plans to raise $175 million by issuing convertible preferred shares to its largest shareholder, P2 Capital Partners. The sale will raise P2 Capital’s stake in the company from less than 11 percent to more than 18 percent.
In addition, UTi said it has received commitments from affiliates of Citigroup Global Markets Inc and Morgan Stanley & Co for a new $150 million five-year credit facility once the notes and preferred shares are sold.
The longer-term refinancing would remove existing restrictive covenants. The company’s finances have been hurt by a weak air freight market and competitive forces, but Chief Executive Eric Kirchner was upbeat about investments to restructure the company and upgrade its technology.
“This will be a pivotal year for UTi,” Kirchner said during a conference call with analysts. “The transformation is nearing completion. We have been working toward this for five years in a challenging environment and we’re now in the ninth inning.”
Shares closed down $4.52, or 30 percent, to $10.74 on the Nasdaq.