Todd Maiden
7 min read
In This Article:
Ancora Holdings Group provided a detailed presentation late Tuesday outlining why Forward Air shareholders should vote out “three unfit legacy directors” it blames for the company’s “disastrous acquisition of Omni Logistics” and “efforts to stall the company’s current sale process.”
The activist investor first penned a letter to shareholders two weeks ago calling for the removal of Chairman George Mayes and directors Javier Polit and Laurie Tucker. It said the three will be forced to resign it they don’t garner 50.1% of the vote at the June 11 annual meeting.
Shares of Greeneville, Tennessee-based Forward Air (NASDAQ: FWRD) closed Tuesday at just $18.04, a far cry from the $110 closing price the stock held prior to the August 2023 merger announcement with Omni.
The Omni acquisition was structured through a series of transactions to preclude a vote by shareholders as required by Tennessee law. It was funded with $1.85 billion of debt and gave Omni’s private equity backers control over a 38% voting bloc and four board seats. (Some shareholders have taken issue with the entrenchment nature of the deal, as the voting bloc is required to vote in favor of board-chosen directors at elections.)
Forward closed the 2025 first quarter at a 5.3 times net debt leverage ratio, an improvement from 5.5 times at the end of the year but significantly higher than the sub-2 times projected for 2025 when the deal was announced.
On a combined basis, Forward and Omni had pro forma earnings before interest, taxes, depreciation and amortization of $593 million (inclusive of $125 million in expected deal synergies) for the 12-month period ended June 30, 2023 – the last period prior to the 2023 deal announcement. (Forward closed the first quarter with last-12-months’ adjusted EBITDA of just $313 million.)
The underperformance required the company to modify its credit agreement earlier this year to avoid breaching a debt covenant of 4.5 times leverage set for later this year.
“Each of the targeted directors was on the Board in August 2023 when it decided to pursue the Omni Logistics LLC (‘Omni’) acquisition and bears responsibility for the disastrous deal, which was criticized by shareholders and independent onlookers because it burdened the Company with substantial debt, presented operational and integration challenges, and strained customer relations,” the Ancora presentation said.
“We believe Forward Air has limited opportunity as a standalone public company – with its level of debt, remaining independent will likely mean additional dilution for the Company’s equity holders.”
