Watch Now


Forward Air, Omni pointing fingers over EBITDA forecasts

Forward claims merger financing now ‘inadequate’

The Delaware Court of Chancery will hear the matter on Jan. 19. (Photo: Jim Allen/FreightWaves)

The fate of a merger between Forward Air and Omni Logistics will likely come down to a court’s interpretation of whether Omni performed as required on its pre-closing obligations. Omni’s response to Forward’s counterclaim in the Delaware Court of Chancery on Monday shed more light on the dispute between the two parties.

Forward (NASDAQ: FWRD) has alleged that Omni failed to provide timely disclosure of financial updates and that its 2023 projections are below levels previously reaffirmed with lenders and deal arrangers. Forward has asked the court to let it out of the deal, citing a breach of the merger agreement. Omni disputes those claims and has called on the court to force Forward to the altar.

Omni said Forward’s assertion that it has breached pre-closing requirements is “a baseless pretext to back out of a transaction it no longer wishes to pursue but is legally obligated to close,” the filing read.

It said Forward wants out of the deal because of the pressure it is getting from shareholders, which have said the merger is too costly, adds too much debt and shifts control out of existing shareholder hands and into the hands of Omni’s stakeholders, among other things.


Omni’s 2023 EBITDA projections scrutinized

Omni said Forward is misrepresenting “a variety of performance and cost-save scenarios” as evidence that its 2023 projections are lower than what it confirmed in due diligence meetings.

Forward told lenders on Oct. 2, the day it closed on a $725 million notes issuance as part of the deal’s financing, that Omni would generate $167 million in adjusted earnings before interest, taxes, depreciation and amortization during 2023. However, it said a day later Omni’s CEO J.J. Schickel showed Forward Air CEO Tom Schmitt a slide that displayed a 2023 EBITDA forecast of just $111.2 million.

Forward said the projection was not presented as a “what if” or “no growth” scenario and it believes the number to be the company’s actual forecast. Forward said its analysis of Omni’s results showed just $73 million in adjusted EBITDA through the third quarter, presenting a large gap that would have to be bridged in the fourth quarter to achieve the full-year forecast.

The company said Omni repeatedly failed to provide its actual results as it wanted “direction” from Forward on interpreting “various assumptions.” Omni has said it needed assistance from Forward on the proper way to divide the expected EBITDA synergies the merger would produce. Forward claims the reason for the delay is that Omni’s prior “projections had been misleading.”


Forward said Omni restated numbers on Nov. 1 after filing its complaint in court. It said Omni lowered its full-year adjusted EBITDA forecast to $160 million and revised actual results for the first three quarters to total $115 million (from $73 million) “in an attempt to make this much higher projection appear more plausible.”

In the filing, Omni denied the allegations and said it “never misrepresented anything to the lenders.” It said it stands by its prior EBITDA projections and that its current 2023 forecast remains $160 million, which is “only modestly off the projection of $167 million that Forward provided the lenders in August.” It said that Forward also “has missed its own projections for 2023.”

“Forward’s attempt to transform its deliberate misreading of the ‘what if’ slide into a breach of the Merger Agreement only underscores that it has no basis to avoid its obligations,” the filing said.

Delays, lower projections result in ‘inadequate’ deal financing, Forward says

Forward claims Omni withheld requested financial information, which caused it to pull its full-year 2024 targets that were shared with lenders.

“Forward Air — without knowing the full and accurate extent of Omni’s outlook on its performance — negotiated a loan structure and loan terms that now appear to be inadequate for the transaction, as well as incompatible with the overall debt, leverage and risk profiles of the combined company.”

Forward said it will now have to “draw more heavily” on its revolving credit facility, which was only expected to backstop the deal. It said tapping the credit line could limit its ability to invest in and fund its other areas of operation. Forward said it would incur more debt at a higher cost if it revised the capital structure of the transaction. It also said it now faces a potential credit downgrade.

“Had Forward Air received Omni’s information when it was due, Forward Air would have realized that it needed additional financing in order to afford the transaction on the terms of the Merger Agreement,” the filing said. “That is, had Forward Air known that Omni’s adjusted EBITDA for FY 2023 was actually much closer to $111.2 million (which Omni now claims was never a projection), rather than the $167 million Omni repeatedly affirmed, Forward Air would have realized it would have difficulty paying for the transaction with the financing package it had negotiated.”

Omni said “these claims are meritless.”


The court is expected to hold a Jan. 19 hearing on the dispute.

More FreightWaves articles by Todd Maiden

Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.