A private equity firm that lent money to Velocity Express is taking a majority stake in the regional delivery service in exchange for forgiving its debt.
A subsidiary of private equity firm ComVest Investment Partners III L.P. will become the majority owner of Velocity Express in the debt-for-equity swap. The carrier’s management team, which will remain in place, and former bondholders will own the remaining shares in the firm, which specializes in time-sensitive deliveries.
The deal will eliminate more than $100 million in debt and allow Velocity Express to emerge as a stronger company, says CEO Vincent A. Wasik. “With a stronger financial position, we will continue to be able to pursue large business development opportunities, and increase our investment in technology and services to benefit our valued customers,” Wasik says. “We will also have the backing and support of a new strong financial and operating partner in ComVest.”
Jose Gordo, a partner at ComVest, says “this restructuring will eliminate the significant debt that has burdened the company for the last few years and turn the company’s balance sheet into a major strength. Velocity has a solid operational foundation with outstanding long-term customers and a strong sales pipeline. Together, we look forward to continuing to provide Velocity’s customers with the timely, high-quality service they have come to expect.”
Velocity’s restructuring will be accomplished through a pre-packaged Section 363 sale pursuant to Chapter 11 of the United States Bankruptcy Code, the company says.