Celadon extends revolving credit line, cancels plans for term loan

By Marisa Wong

Morgantown, W.Va., July 3 – Celadon Group, Inc. and its existing lenders agreed on an amendment to increase liquidity and extend the covenant package under its existing line of credit, according to a press release.

The company also announced that it terminated its previously announced term loan term sheet.

Celadon said its primary financing consists of its revolving line of credit and existing equipment notes and leases. The line of credit currently has $180 million of maximum borrowing capacity plus $30 million of letter-of-credit capacity.

The amendment will increase the maximum amount to $230 million, consisting of $195 million maximum borrowing capacity plus $35 million of letter-of-credit capacity, through Dec. 1, then decrease to $170 million.

Pricing is the base rate plus 800 basis points.

The company will pay a monthly commitment fee beginning in October at the rate of 0.45% of the total commitments, which are currently $250 million.

The amendment is expected to close by July 13, the expiration date of the existing covenant package under the credit line.

At June 30, the company’s outstanding borrowings under the line of credit was about $161 million, and outstanding letters of credit were roughly $23 million. Based on the company’s current cash flow forecast, the liquidity provided by the amendment is expected to be sufficient through the amendment period, July 13 to Dec. 12.

Celadon’s chief executive officer, Paul Svindland, commented in the press release, “In relation to our refinancing efforts, the previously disclosed term loan financing term sheet is no longer being pursued and exclusivity has been terminated. We would have been pleased to afford our stakeholders the certainty of having completed the refinancing process.

“However, both the company’s performance and the industry backdrop have improved since the proposed terms were negotiated, and we are optimistic about our ability to source alternative financing. We are immediately re-engaging with alternative sources of capital as well as the lenders and lessors in our existing capital structure, and we have engaged a globally recognized investment bank to support us in this process.

Svindland continued, “We are grateful for the confidence displayed by our existing revolving lenders, Bank of America, Wells Fargo, and Citizens Bank, who immediately stepped up with a proposed increase in liquidity and extended covenant relief to support a refreshed capital raising process.

“The vast majority of our equipment lenders and lessors have been equally supportive during our past efforts while we have remained current in our regular monthly payments. We will require the continued cooperation of these groups in future periods as we re-start the refinancing process and review other alternatives to reduce our total debt and lease obligations.

“We expect the process to be ongoing through much if not all of the remainder of 2018,” Svindland said.

The Indianapolis-based company provides long-haul, full-truckload freight service across the United States, Canada and Mexico.

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