Wed, 04 Aug 2021

Acquisition Would Anchor Company's Growth Strategy

JUPITER, FL / ACCESSWIRE / June 21, 2021 / Transportation and Logistics Systems, Inc. (OTC Pink:TLSS) ('TLSS' or the 'Company'), an eCommerce fulfillment service provider, today announced that on June 15, 2021, it entered into a stock purchase agreement to acquire all of the outstanding stock of SalSon Logistics, Inc., a leading third-party logistics company founded in 1960, based in Newark, New Jersey ('SalSon'). The purchase price for the acquisition is $90 million, which based on a multiple of the EBITDA of SalSon, with the consideration payable in the form of $50 million of cash, 19.9% of the Company's then outstanding Common Stock, and $20 million in seller financing.

According to CEO John Mercadante, 'This would be a game-changing acquisition for TLSS. Anthony Berritto has built an outstanding business, a leader in the industry, with a long-standing history of servicing some of the most prestigious companies in the country. Moreover, SalSon's business provides an amazing platform and extensive infrastructure that would greatly enhance the Company's ability to execute its acquisition and organic growth strategy.'

The Company's primary strategy has been to become a leader in the transportation industry in providing on-time, high-quality pick-up, transportation and delivery services. The Company has expected to accomplish this goal, in part, by pursuing strategic acquisitions as a means of adding new markets in the United States, expanding its transportation and logistics service offerings, adding talented management and operational employees, expanding and upgrading its technology platform and developing operational best practices. Moreover, one factor in assessing acquisition opportunities is the potential for subsequent organic growth post-acquisition.

After undertaking, what the Company believes has been, a successful restructuring in 2020, the Company began its acquisition strategy in Q1 2021 to replace its previously unprofitable Amazon business through the purchase of Double D Trucking and Cougar Express. The Company believes that SalSon Logistics represents the type of business operation that would provide the infrastructure suitable as a foundation for significant growth through subsequent acquisition opportunities, as well as for organic growth potential. Moreover, the depth of SalSon's assets, strong operational management team, infrastructure, technology, client base, revenue diversification and premier location would help mitigate potential operational integration risks and costs associated with an acquisition strategy.

SalSon, which is strategically located in the heart of Port of Newark, with additional locations in Florida, Georgia, New York, South Carolina, Texas and Virginia, offers a range of services including warehousing, transload services, dedicated contract carriage, dray management, and store delivery servicing the retail, food and beverage, and industrial sectors. With more than 1,200 associates, over 1 million square feet of warehousing and a dedicated fleet of 550 tractors and 1,500 trailers, SalSon's capabilities include cross dock, regional and local truckload, intermodal, vendor consolidation and deconsolidation, pool distribution, and unattended store delivery.

Finally, the Company believes this acquisition could improve the growth potential of TLSS because, with SalSon as the core foundational operation of the Company, synergistic targets that complement this business could bring immediate value when more acquisitions are secured. Furthermore, the opportunity for broadening existing customer relationships of SalSon customers or future strategic acquisition customers would likely improve with a linchpin transaction like SalSon.

Mr. Anthony Berritto, President of SalSon, added, 'we are in one of the most exciting and opportunistic times in the logistics space. So by joining forces with TLSS, a publicly-traded company, I strongly believe that together, we can accelerate our mutual goal of growth through strategic acquisition, as well as more readily capitalize upon organic growth opportunities presently available in the industry.'

Mr. Berritto is expected to stay on to oversee the operation of SalSon and the Company's existing fulfillment services subsidiaries. It is a condition to the closing of the transaction that Mr. Berritto enter into an employment agreement with SalSon. Mr. Berritto has agreed in principle to do so, but if the parties do not reach an agreement on employment terms, the Company does not intend to complete the transaction.

The transaction is contingent upon the Company's ability to secure debt financing for the cash portion of the purchase price. The financing will be secured by the assets of SalSon, and it will likely rely exclusively on SalSon's assets and financial performance. SalSon currently is profitable with almost $100 million in annual revenues.If the debt financing for the cash portion of the purchase price cannot be obtained, then the transaction will not close.

The Company expects that it will need to raise the aggregate of approximately $60 million in financing (including approximately $6 million in equity financing) to fund the cash portion of the purchase price, investment banking fees, transaction costs and working capital for SalSon and the Company's other operations. The financing amount is approximately 2.4 times the Company's market capitalization as of the date of this press release. If the financing is completed, the Company also will be required to issue common stock equal in value to up to 5% of the aggregate debt financing and warrants (with a 5-year term and cashless exercise) to purchase shares equal in value to up to 10% of the aggregate securities financing.

Since the Company has experienced losses in its recent years of operations and currently has a negative net worth, no assurance can be provided that the Company will be able obtain such financing. The Company has just commenced a search for financing by hiring an investment banking firm to assist in the search, which has made inquiries with several financial institutions. As present, the Company has not yet received any proposed terms for financing or entered into an agreement for financing.

If the contemplated additional equity financing cannot be obtained, the Company will not have adequate cash available to fully fund the acquisition and transaction costs, the operations of SalSon and its other subsidiaries and investment banking fees. Such inability could also impair the Company's ability to raise the necessary debt financing. If such inability is first encountered after the Company procures a commitment for the debt financing and the contingency period for terminating the stock purchase agreement lapses, then it could also result in the Company's default under the stock purchase agreement, since the closing of the transaction is not conditioned upon the Company securing such additional equity financing.

The transaction is scheduled to close ninety (90) days after the execution of the SPA, subject to the completion of satisfactory due diligence by the Company. The transaction does not include any deposit, breakup or termination fee in the event that it does not close due to a failure to meet any of the contingencies, including that the Company cannot reach terms with Mr. Berritto for his employment or the Company cannot obtain the financing needed to close the acquisition.

Additional information concerning the matters discussed in this press release is available in the Company's Current Report on SEC Form 8-K, dated June 21, 2021, and in the exhibit thereto which is a copy of the subject stock purchase agreement. The report may be viewed on the Company's website, www.tlss-inc.com.

About Transportation and Logistics Systems, Inc.
TLSS, through its wholly-owned operating subsidiaries, Shypdirect LLC, Shyp FX, Inc. and Cougar Express, Inc., operates as a full-service logistics and transportation company.

For more information, visit the Company's website, www.tlss-inc.com.

Forward Looking Statements
Statements in this press release regarding the Company that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not directly or exclusively relate to historical facts. In some cases, you can identify forward-looking statements by terms such as 'may,' 'will,' 'should,' 'could,' 'would,' 'expects,' 'plans,' 'anticipates,' 'intend,' 'plan,' 'goal,' 'seek,' 'strategy,' 'future,' 'likely,' 'believes,' 'estimates,' 'projects,' 'forecasts,' 'predicts,' 'potential,' or the negative of those terms, and similar expressions and comparable terminology. These include, but are not limited to, statements relating to future events or our future financial and operating results, plans, objectives, expectations and intentions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not be achieved. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to known and unknown risks, uncertainties and other factors outside of our control that could cause our actual results, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. In addition to the risks described above, these risks and uncertainties include: our ability to successfully execute our business strategies, including integration of acquisitions and the future acquisition of other businesses to grow our company; customers' cancellation on short notice of master service agreements from which we derive a significant portion of our revenue or our failure to renew such master service agreements on favorable terms or at all; our ability to attract and retain key personnel and skilled labor to meet the requirements of our labor-intensive business or labor difficulties which could have an effect on our ability to bid for and successfully complete contracts; the ultimate geographic spread, duration and severity of the coronavirus outbreak and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the outbreak or ameliorate its effects; our failure to compete effectively in our highly competitive industry could reduce the number of new contracts awarded to us or adversely affect our market share and harm our financial performance; our ability to adopt and master new technologies and adjust certain fixed costs and expenses to adapt to our industry's and customers' evolving demands; our history of losses, deficiency in working capital and a stockholders' deficit and our ability to achieve sustained profitability; material weaknesses in our internal control over financial reporting and our ability to maintain effective controls over financial reporting in the future; our substantial indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations; the impact of new or changed laws, regulations or other industry standards that could adversely affect our ability to conduct our business; and changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural or man-made disasters.

These forward-looking statements represent our estimates and assumptions only as of the date of this release and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this letter. Given these uncertainties, you should not place undue reliance on these forward-looking statements and should consider various factors, including the risks described, among other places, in our most recent Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q, as well as any amendments thereto, filed with the Securities and Exchange Commission.

Investor Relations Contact:
Phone: 833.764.1443
Email: info@tlss-inc.com

SOURCE: Transportation & Logistics Systems



View source version on accesswire.com:
https://www.accesswire.com/652430/TLSSEnters-Into-Agreement-to-Acquire-Salson-Logistics-Inc

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