Rand Logistics raises $16.1 million, acquires vessels

Great Lakes bulker operator Rand Logistics, Inc. (Nasdaq:RLOG) reports that it has successfully closed its public underwritten offering of 2,800,000 shares of common stock at $6.00 per share. Proceeds, net of underwriter’s commissions, were $16.1 million. Rand expects to use the net proceeds of the offering to partially fund the anticipated acquisition of two dry bulk carriers, one of which is a self-unloader, and for general corporate purposes. With respect to the anticipated acquisitions, Rand also announced today that it has entered into agreements to purchase the two bulk carriers for a total purchase price of $25 million. The acquisition of the self-unloading vessel (which is an integrated tug/barge unit) is subject to Rand obtaining acceptable debt financing for such acquisition. Rand anticipates investing an additional $10 million to modify the two bulk carriers.

Scott Bravener, President of Lower Lakes, commented, “We are very pleased to announce the signing of the vessel acquisition agreements. The acquisition of additional vessels not currently operating on the Great Lakes will allow us to meet the growing needs of our customers. We believe that the self-unloading dry bulk carrier is the only Jones Act-compliant vessel currently operating outside the Great Lakes with dimensions that allow for it to be transferred into the Great Lakes. Based on current market conditions, we believe that substantially all of the 2012 sailing days related to the new vessels will be utilized in servicing existing and new customers.

An SEC filing by Rand Logistics gives more details of the vessel acquisitions. Here’s what it says:

On September 21, 2011, Lower Lakes Towing Ltd. (“Lower Lakes”) and Grand River Navigation Company, Inc. (“Grand River”), each of which are indirect wholly-owned subsidiaries of Rand Logistics, Inc. (the “Company”), entered into an Asset Purchase Agreement (the “Bulk Carrier Agreement”) with U.S. United Ocean Service, LLC (“USUOS”) pursuant to which Lower Lakes will purchase a bulk carrier (the “Bulk Carrier”) from USUOS for a purchase price of $5,250,000 plus the value of the remaining bunkers and unused lubricating oils onboard the Bulk Carrier at the closing of the acquisition.  The Bulk Carrier Agreement provides that Grand River will purchase the Bulk Carrier under certain circumstances, including if the United States Maritime Administration does not grant a Transfer Order approving the foreign sale to Lower Lakes.  The Bulk Carrier Agreement is subject to customary closing conditions.

Also on September 21, 2011, Grand River entered into an Asset Purchase Agreement (the “Tug Agreement”) with USUOS pursuant to which Grand River will purchase a tug (the “Tug”) from USUOS for a purchase price of $7,795,625 plus the value of the remaining bunkers and unused lubricating oils onboard the Tug at the closing of the acquisition.  The Tug Agreement is subject to customary closing conditions and (i) Grand River’s satisfactory inspection of the Tug, (ii) Grand River having obtained debt or equity financing, on terms and conditions satisfactory to Grand River in its sole discretion, to fund all or a portion of the Tug’s purchase price and (iii) Grand River having purchased the Barge (as defined below) pursuant to the Barge Agreement (as defined below).

Additionally, on September 21, 2011, Grand River entered into an Asset Purchase Agreement (the “Barge Agreement)” with USUOS  pursuant to which USUOS granted Grand River the option to act as USUOS’s third-party designee to purchase a self-unloading barge (the “Barge”) for a purchase price of $11,954,375 plus the value of the remaining bunkers and unused lubricating oils onboard the Barge at the closing of the acquisition.

September 27, 2011