STA completes $50M PIPE
April 15, 2008
Wall, N.J., school bus company Student Transportation of America Ltd. announced on Monday, April 14, that it had sold over 8 million common shares in a pair of private investments to the French national railway and to Canadian fund manager Caisse de Dépôt et Placement du Québec. The total value of both deals is roughly $50 million.
STA chief executive Denis Gallagher told The Deal he has $90 million available on his credit facility that will be used for additional acquisitions his company is expected to close by September. He declined to specify the number of deals or identify targets but said he was seeking to invest an average of $5 million to $15 million per deal.
Société Nationale des Chemins de Fer Français, or SNCF, which is 99% owned by the French national railway, acquired about 6.5 million shares at about $6.10 each for a total of around $40 million. Caisse, STA’s largest shareholder, increased its holdings in STA to 18.3% by acquiring around 1.7 million shares at $5.85 per share. STA sold a total of 8,266,799 through the private placement. Both transactions are expected to close April 18. Gallagher said SNCF had been looking for a strategic acquisition for some time before settling on STA.
Shares of STA, which is listed on the Toronto Stock Exchange, were trading at about $5.80 with its market capitalization near $183 million.
“We have great respect for the business that SNCF has built around the world in transportation. We are also very pleased that the Caisse de Dépôt continues to demonstrate confidence and commitment to STA by increasing its investment,” Gallagher said in a statement.
STA said it will use the funds toward future acquisitions and repay any outstanding loans under its current credit facility.
Earlier this year, STA announced that it completed the acquisition of school bus operator Canadex Resources Ltd. The company has made about 31 acquisitions in the last eight years, according to Gallagher. Sixty percent of the company’s growth is due to these acquisitions. STA operates about 5,000 school bus vehicles throughout North America.
The company was originally founded in 1997 and went public in December 2004. Gallagher has said in the past that he would like to get STA listed on the New York Stock Exchange or Nasdaq.
Wellington West Capital Markets Inc. was the financial adviser for STA, and Rothschild advised SNCF.
Herve Sawko, Matthew Savage and David Savard were the representative bankers for Rothschild.