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Xpress Global Systems (XGS) has more than 200 trucks and operates 33 terminals across the country, including its main terminal in Tunnel Hill, Georgia. Aterian Investment Partners, a New York-based equity group, purchased XGS just before Christmas 2018. / Photo by Dave Flessner
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Xpress Global Systems (XGS) has more than 200 trucks and operates 33 terminals across the country, including its main terminal in Tunnel Hill, Georgia. Aterian Investment Partners, a New York-based equity group, purchased XGS just before Christmas 2018. / Photo by Dave Flessner

A New York equity investment firm has purchased Xpress Global Systems (XGS), three years after the Chattanooga-based trucking company was spun off from U.S. Xpress Enterprises.

In its fourth company purchase of 2018, Aterian Investment Partners bought Xpress Global Systems last week and promised to invest in the future growth of the 32-year-old company. Aterian has invested or bought 18 diverse companies, including turnaround, distressed, mature and growth-oriented firms, since its start in 2009 and made four business exits so far.

"We are excited to add XGS to the Aterian portfolio and for the opportunity to collaborate with and support management as the company enters its next phase of growth," Michael Fieldstone, a partner and CEO at Aterian, said in a statement announcing the purchase. "We intend to facilitate management's efforts to invest in key growth and optimization initiatives across its service offerings and network to further the company's existing reputation for being a leader in floor covering logistics."

Founded and headquartered in Chattanooga, XGS is largest non-captive provider of carpet and other floorcovering shipments. Derek Bartley, vice president of process improvement at XGS for the past two years, said the company has more than 600 employees, including about 150 at its headquarters facility on Shallowford Road in Chattanooga and at its main truck terminal in Tunnel Hill, Georgia next to a similar terminal operated by its former parent, U.S. Xpress Enterprises, which is also headquartered in Chattanooga.

XGS grew to 33 terminals and controlled 80 percent of the outsourced floor covering logistics market when it was spun off in 2015 from U.S. Xpress to a group of buyers that included Panton, Mosaic Investments, Alcentra Capital and Brightwell Investments. The company continues to operate 28 service centers across the United States servicing more than 3,000 customers. XGS is the only national dedicated floor coverings carrier, although the company has diversified into other industries as well.

"This transaction is a great example of Aterian's ability to expediently execute on complex situations requiring agreement among multiple parties in advance of closing," said Daniel Krasnow, vice president at Aterian. "We are impressed with what the management team has accomplished and are excited to support the team as we continue to service our customers."

Xpress Global, one of the largest independent trucking companies in the country, hired former FedEx Executive Darrell Harris in November 2016 to head the company and Harris remains as chief executive of XGS. In a statement, Harris said Xpress Global has a long history of carpet and floorcovering shipments "and this partnership will position XGS to enhance the customer experience.

"We are excited to become part of the Arterian family," Harris said. "We remain committed to being the premier transportation provider to the floor covering industry for years to come."

Aterian raised $350 million in the latest round of its equity fundraising in August and has since made three corporate acquisitions. In 2016, Aterian Partners was named "Private Equity Firm of the Year" and won a Turnaround Atlas Award, which honors excellence in restructuring, distressed investing and turnaround investments and operations.

The trade publication Freightwaves said Xpress Global "has been struggling in recent years" as it tries to build a shipment model heavily dependent upon floorcovering goods made or shipped from North Georgia and southern California.

"To us, this deal, which was announced the Friday afternoon before Christmas, looks like a fire sale in which Aterian assumes XGS's debt and acquires equity at a massive discount, returning pennies on the dollar to the previous owners," Freightwaves' Associate Editor John Paul Hampstead wrote in a report on the sale.

Terms of the sale and investment were not disclosed.

Aterian Investment Partners said it focuses on businesses generating $25 million to $500 million of annual revenue with strong, proven franchises. After making an investment, Aterian said it "seeks to focus on the critical growth, operational and liquidity initiatives of a business in an effort to drive value creation for all stakeholders."

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340

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