Judge Expected to Select Winning Bidder to Be New Owner of Carrier Gainey Corp.
This story appears in the Nov. 16 print edition of Transport Topics.
Gainey Corp.’s future owner is expected to be decided this week, following a three-way contest for the bankrupt carrier, CEO Harvey Gainey said.
Gainey, primarily a truckload carrier, is being sought by private equity firms Najafi Cos., Phoenix; ComVest Group, West Palm Beach, Fla.; and Wayzata Investment Partners, Wayzata, Minn. U.S. Bankruptcy Court Judge James Gregg will decide among the bidders on Nov. 17, Gainey told Transport Topics last week.
The trucking company filed for bankruptcy 13 months ago, as debts piled up and some lenders filed suit against the Grand Rapids, Mich., company. Lenders contended that the terms of its loan agreement were breached, and they sought $238 million from the firm, ranked No. 73 on the Transport Topics 100 list of the largest for-hire carriers in the United States and Canada. Gainey disputed the allegations and filed for bankruptcy on Oct. 14, 2008.
“It’s looking like there will be a good outcome for the employees and the company,” Gainey said, noting that he does not expect any of the company’s 2,000 workers to lose their jobs as a result of the reorganization proceeding.
Najafi offered $68 million in cash for the company, while ComVest and Wayzata each entered bids of $69.5 million. Under the bankruptcy rules, Najafi was named the so-called “stalking-horse bidder,” and the other two companies had to offer $1.5 million more to participate in a court proceeding scheduled for Nov. 16, where they can bid against each other.
Gainey explained that the judge will make the final decision the day after the bidding procedure, using criteria such as the amount of the offers and their terms to decide the winner. The company still intends to exit bankruptcy by year-end.
ComVest in recent weeks agreed to become the majority owner of Velocity Express after a bankruptcy filing by that company. ComVest’s holdings also include logistics and airline companies.
The recession hit Gainey Corp. hard, cutting revenue from about $400 million in 2007 to about
$300 million last year. While truckload service under the Gainey and Super Service brand names are the company’s primary business, it also has less-than-truckload and logistics subsidiaries.
The road to the three-way bidding proceeding included some detours. The judge directed Najafi to restructure an earlier bid of $105 million that included $45 million in cash and $60 million that would have been raised by sale of some equipment. The Najafi offer now is all-cash, as are the other two bids.
Gainey would not say what future role he might have in the company through the three offers, saying he had been advised not to disclose that in advance of the bidding.
Earlier, he had said he would own 20% of the surviving company.
