VSE Corporation Announces Public Offering of Common Stock
VSE (NASDAQ: VSEC), a key player in aftermarket distribution and repair services, announced a public offering of shares of its common stock, subject to market conditions. VSE plans to grant underwriters a 30-day option to purchase up to an additional 15% of the shares offered. The proceeds will largely be used to repay existing borrowings and fund future strategic acquisitions, including the recent acquisition of Turbine Controls, Inc. Jefferies, RBC Capital Markets, and William Blair are managing the offering. The offering is under a shelf registration statement filed with and declared effective by the SEC.
- Public offering aims to raise funds to repay outstanding borrowings and support future acquisitions.
- Granting underwriters a 30-day option to purchase an additional 15% of shares could increase capital raised.
- Proceeds will support the acquisition of Turbine Controls, Inc., enhancing VSE's market position.
- Jefferies, RBC Capital Markets, and William Blair's involvement adds credibility to the offering.
- Dilution of existing shares due to the new common stock offering may negatively affect current shareholders.
- Market conditions could impact the success and final terms of the public offering.
- Proceeds are being used to repay debt, indicating prior leverage and potential financial vulnerability.
Insights
VSE Corporation's decision to conduct an underwritten public offering of its common stock is a significant move with multiple implications for investors. Firstly, the net proceeds from this offering are earmarked for repaying outstanding borrowings under its revolving loan facility, including those incurred for the acquisition of Turbine Controls, Inc. This indicates that VSE is focusing on stabilizing its financial structure by reducing debt, which can positively impact its credit rating and reduce interest expenses in the long term.
The inclusion of a 30-day option for underwriters to purchase an additional 15% of the shares suggests that VSE is allowing flexibility to accommodate investor demand, which can be a signal of confidence in the market's reception of this offering.
However, increasing the number of outstanding shares will lead to share dilution, which often concerns existing shareholders as it can potentially decrease the earnings per share (EPS) and thus, the value of each share. Retail investors need to weigh this dilution against the potential benefits from the company’s planned use of proceeds, which include potential future strategic acquisitions and general corporate purposes, indicating a drive for growth and expansion.
This public offering by VSE Corporation comes at an interesting time in the market. The decision to use proceeds for strategic acquisitions hints at an aggressive growth strategy, aiming to expand its footprint in the aftermarket distribution and repair services sector. This can be viewed positively if VSE identifies and acts on value-accretive opportunities.
Moreover, the involvement of reputable underwriters like Jefferies, RBC Capital Markets and William Blair adds a layer of credibility to this offering. These firms have a track record of backing successful public offerings, which might instill confidence among potential investors.
Nonetheless, retail investors need to be cautious of market conditions which can significantly affect the success of this offering. If market sentiment is negative or volatile, it might influence the stock price adversely in the short term. Additionally, the company's long-term success will heavily depend on how effectively it utilizes the capital raised through this offering.
VSE expects to use substantially all of the net proceeds from this offering to repay outstanding borrowings under its revolving loan facility, including borrowings to fund its acquisition of Turbine Controls, Inc., to support potential future strategic acquisitions and for general corporate purposes.
Jefferies, RBC Capital Markets and William Blair are acting as joint lead book-running managers and representatives of the underwriters for the offering.
A shelf registration statement relating to the securities being offered has been filed with the Securities and Exchange Commission (the “SEC”) and has been declared effective. The offering is being made only by means of a preliminary prospectus supplement and accompanying prospectus. A preliminary prospectus supplement and accompanying prospectus relating to the offering will be filed with the SEC and will be available free of charge on the SEC’s website at http://www.sec.gov. Copies of the preliminary prospectus supplement and accompanying prospectus relating to this offering of securities may also be obtained from Jefferies LLC, Attn: Equity Syndicate Prospectus Department, 520 Madison Avenue,
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities described herein, nor shall there be any sale of the securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities law of any such jurisdiction.
ABOUT VSE CORPORATION
VSE is a leading provider of aftermarket distribution and repair services. Operating through its two key segments, VSE significantly enhances the productivity and longevity of its customers' high-value, business-critical assets. The Aviation segment is a leading provider of aftermarket parts distribution and maintenance, repair, and overhaul services for components and engine accessories to commercial, business, and general aviation operators. The Fleet segment specializes in part distribution, engineering solutions, and supply chain management services catered to the medium and heavy-duty fleet market. For more detailed information, please visit VSE's website at www.vsecorp.com.
FORWARD-LOOKING STATEMENTS
This press release contains statements that, to the extent they are not recitations of historical fact, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All such statements are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and this statement is included for purposes of such safe harbor provisions.
“Forward-looking” statements, as such term is defined by the SEC in its rules, regulations and releases, represent our expectations or beliefs, including, but not limited to, statements concerning our expectations regarding the offering of common stock, including the expected timing, terms, size and use of proceeds, our expectation that we will complete the proposed offering, our operations, economic performance, financial condition, the impact of widespread health developments, the health and economic impact thereof and the governmental, commercial, consumer and other responses thereto, growth and acquisition strategies, investments and future operational plans. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “forecast,” “seek,” “plan,” “predict,” “project,” “could,” “estimate,” “might,” “continue,” “seeking” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements.
These statements speak only as of the date of this press release and we undertake no ongoing obligation, other than that imposed by law, to update these statements. These statements relate to, among other things, our intent, belief or current expectations with respect to: our future financial condition, results of operations or prospects; our business and growth strategies; and our financing plans and forecasts. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, certain of which are beyond our control, and that actual results may differ materially from those contained in or implied by the forward-looking statements as a result of various factors, some of which are unknown, including, without limitation:
- supply chain delays and disruptions;
- risks related to our work on large government programs;
- our ability to successfully integrate and realize the anticipated benefits of recently acquired businesses, including the recently-acquired Turbine Controls, Inc. business;
- our ability to successfully divest businesses, including our Federal and Defense segment, and to transition facilities in connection therewith;
- risks related to future business conditions resulting in impairments;
- risks related to the intense competition in our industry;
- risks related to the performance of the aviation aftermarket;
- global economic and political conditions;
- prolonged periods of inflation and our ability to mitigate the impact thereof;
- challenges related to workforce management or any failure to attract or retain a skilled workforce;
- our dependence on third-party package delivery companies;
- our compliance with government rules and regulations, including environmental and pollution risk;
- risks related to technology security and cyber-attacks;
- risks related to our outstanding indebtedness;
- risks related to market volatility in the debt and equity capital markets; and
- the other factors identified in our reports filed or expected to be filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024.
You are advised, however, to consult any further disclosures we make on related subjects in our periodic reports on Forms 10-K, 10-Q or 8-K filed with or furnished to the SEC.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240514473196/en/
INVESTOR RELATIONS CONTACT:
Michael Perlman
Vice President of Investor Relations and Treasury
Phone: (954) 547-0480
Email: investors@vsecorp.com
Source: VSE Corporation
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