Wabash National Corp. on Friday, July 17, announced that it has entered into a securities purchase agreement with Trailer Investments LLC — an entity formed by Lincolnshire Equity Fund III L.P., a private equity investment fund managed by Lincolnshire Management Inc. — pursuant to which Trailer Investments will invest $35 million in the company.
Pursuant to the terms of the securities purchase agreement, Trailer Investments will purchase $20 million of Series E redeemable preferred stock comprised of 20,000 shares of Series E redeemable preferred stock at a price per share of $1,000; $5 million of Series F redeemable preferred stock comprised of 5,000 shares of Series F redeemable preferred stock at a price per share of $1,000; and $10 million of Series G redeemable preferred stock comprised of 10,000 shares of Series G redeemable preferred stock at a price per share of $1,000.
The dividend rates for the Series E redeemable preferred stock, Series F redeemable preferred stock and Series G redeemable preferred stock are 15 percent per annum, 16 percent per annum and 18 percent per annum, respectively. The dividends are payable quarterly and will be increased by 0.5 percent every quarter if the respective class of redeemable preferred stock still is outstanding after the five-year anniversary of the closing of the transaction. During the first two years, dividends may be accrued at the election of the company.
In addition to the preferred stock, pursuant to the securities purchase agreement the company will issue to Trailer Investments a warrant that is exercisable immediately at $0.01 per share for a number of newly issued shares of common stock representing 44.21 percent of the issued and outstanding common stock of the company after giving effect to the issuance of the shares underlying the warrant, subject to upward adjustment. The number of shares of common stock subject to the warrant is also subject to upward adjustment to an amount equivalent to 49.99 percent of the issued and outstanding common stock of the company on the original issuance date after giving effect to the issuance of the shares underlying the warrant in specified circumstances where the company loses its ability to utilize its net operating loss carryforwards.
“This capital infusion will fortify our balance sheet, allowing us to put in place a capital structure that meets the needs of the company during this economic downturn, including to obtain needed accommodations under our existing credit agreement,” says Dick Giromini, Wabash National president and chief executive officer. “Having conducted a thorough process to evaluate strategic alternatives, we believe that this transaction is a necessary and effective step to protect the interests of our existing stockholders, and we look forward to working with Lincolnshire Management in the future.”
Upon consummation of the investment contemplated by the securities purchase agreement, Trailer Investments will have the right to designate five out of 12 members to the company’s board of directors, among other rights. “Wabash’s market-leading position and solid product line present an exciting investment opportunity for us,” says Michael J. Lyons, senior managing director of Lincolnshire Management. “We are pleased to be partnering with this caliber of management team and look forward to working together and building upon Wabash’s unique franchise.”