Celadon details $105 million of term loans, $60 million revolver

By Wendy Van Sickle

Columbus, Ohio, Aug. 6 – Celadon Group, Inc. gave details of its refinancing of its former revolving credit facility and its $165 million of new financing in an 8-K filing with the Securities and Exchange Commission.

The new financing consists of a $60 million revolving credit facility, $105 million of term loans and equity warrants, as previously reported.

The term loan amount includes $27.9 million of new term loans and $77.1 million in debt that was outstanding under the former credit agreement and was amended and restated into term loans.

Of the $27.9 million, $7 million was used to fund an interest reserve account, which will in turn fund initial interest payments under the term loan agreement; $8 million was allocated to the lenders’ closing fees and original issue discount; and about $12.9 million was advanced to the company in cash, of which about $4.3 million was used to pay professional fees, expenses and other closing costs.

The revolver is intended to fund the company’s working capital; at closing on July 31, about $30 million was drawn under the revolver and used to fund the cash-collateralization of Celadon’s outstanding letter of credit obligations under the former credit agreement.

The revolver and the term loans have three-year terms with a maturity date of July 31, 2022, according to the 8-K filing.

For the revolver, the interest rate is Libor plus 350 basis points with a 1% Libor floor, and the borrowing base is equal to 90% of eligible U.S and Canadian accounts receivable.

The term loans have senior and junior tranches, and the $105 million facility size includes capitalized fees. The interest rate is Libor plus 1,025 bps with a 2% Libor floor. Amortization is zero in the first year, 5% in the second year and 7.5% in the third year.

For both the revolver and the term loans, there are financial covenants concerning the company’s fixed charge ratio, leverage ratio, minimum liquidity and maximum capital expenditures.

The junior tranche term loan provider is receiving the warrants in the transaction with a strike price of one cent per share.

Warrants to purchase 16 million common shares (or convertible preferred shares) are exercisable immediately, and warrants to purchase about 5.5 million shares become exercisable only in a change of control.

The warrants equal about 33% of the company's fully diluted equity. When added to shares currently owned, the holder's fully diluted position will be about 49.9%.

Other warrant terms include board observer rights, registration rights and a requirement to hold a stockholders' meeting to approve an increase in authorized common stock. The company's board of directors granted an exemption for the transaction to avoid triggering the company's stockholder rights plan.

Celadon provides long haul, regional, local, dedicated, intermodal, temperature-protect and expedited freight service and is based in Indianapolis.

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