INDIANAPOLIS, Oct. 2, 2017 /PRNewswire/ -- Celadon Group, Inc.
("Celadon" or the "Company") (NYSE: CGI) today announced an
amendment to its primary credit facility, a separate equipment
financing to afford additional liquidity, and certain corporate
updates.
Chief Executive Officer, Paul
Svindland, commented: "Over the past two months,
Celadon has adopted a new strategic plan and is moving rapidly
toward implementation. The primary components of our plan
include strengthening our capital structure, exiting or downsizing
unprofitable or non-core business, restoring the historical
operating practices and profitability of our irregular route
truckload business, and augmenting our senior management team and
board of directors with world-class talent. We are making
significant progress toward our goals, while acknowledging our
financial results will be uneven during this time.
"Strengthening our capital structure involves refinancing our
revolving credit facility, increasing our liquidity, and extending
the term of equipment leases maturing during fiscal 2018. The
refinancing effort is underway and has received significant initial
interest, while our major equipment lessors have been supportive as
well. We expect to identify lead investors and a proposed
capital structure in November, with a closing targeted for the
second half of December. We appreciate the support of our
revolving lenders and our existing tractor and trailer lessors
during this process.
"Our business evaluation identified core businesses for
investment as well as non-core assets and business units for
disposition. The core truckload business, Celadon Logistics,
A&S/Kinard, Taylor, Buckler, International, and others are key
components of our ongoing strategy. In terms of non-core
assets, we exited the flatbed business and our driver-training
academy in September, and we plan to exit three additional small
businesses, including our Quality Companies lease servicing
business, in coming quarters. In addition, excess trailers
and real estate have been identified for sale.
"The turnaround plan in our irregular route truckload business
is centered around allocating our significant asset capacity toward
profitable, driver friendly, and enduring customer needs within
defined operating territories. Over the past several years,
the fleet size grew too rapidly and our traffic lanes became too
diffuse in our Celadon Truckload Services subsidiary ("CTSI"), the
largest irregular route component of our business. Our plan
includes rationalizing the fleet size and improving our asset
productivity. We expect the strong freight market and growing
shipper demand for capacity to assist us in increasing yield,
driving out unproductive miles, and improving the efficiency of
CTSI's operations. Since Jon Russell
and Doug Schmidt took over CTSI's
truckload operations, average revenue per seated tractor per week
(excluding fuel surcharge revenue) improved from $2,652 in April to $3,069 in August. At the same time, total
truck count decreased by approximately 200 tractors, or 7%, between
April and August, and by approximately another 200 tractors in
September including the previously announced disposition of the
flatbed operation.
"Finally, we are taking steps to augment our team. We have
searches underway for both senior management and independent
director candidates. We expect to add both in the relatively
near term."
Credit Facility Amendment
On September 29, the Company completed an amendment
of its revolving credit facility led by Bank of America, N.A. The
primary amendments included the following:
- Financial covenants re-set through December 31, 2017.
- Maturity date of December 12,
2018.
- Additional reporting and delivery requirements, including with
respect to indicating progress on the refinancing plan during
October and November.
The full text of the amendment and required disclosures will be
reported on a Form 8-K to be filed with the United
States Securities and Exchange Commission ("SEC").
New Financing Improves Liquidity
On September 22, the Company received an
approximately $22.6 million equipment
term loan secured by existing tractors and trailers used in the
Company's Hyndman subsidiary. Proceeds were used to reduce
the outstanding balance on the Company's revolving credit facility
and create additional liquidity during the refinancing process.
SEC Investigation and Class Action Litigation
The SEC
has undertaken a formal investigation related to the Company. The
Company has received a subpoena from the SEC and is in the process
of producing documents pursuant to the subpoena.
Shareholder class action and derivative lawsuits have been filed
by various alleged stockholders of the Company seeking damages or
other remedies related to certain accounting-related matters.
Those lawsuits assert claims under federal or state law related to,
among other things, the Company's previously issued financial
statements.
Financial Statement Timing
Currently, the Company does
not expect to issue audited financial statements or report
financial results in compliance with generally accepted accounting
principles for fiscal 2016, or any subsequent period, before
December 31, 2017.
About Celadon
Celadon Group, Inc.
(www.celadongroup.com), through its subsidiaries, provides long
haul, regional, local, dedicated, intermodal, temperature-protect,
and expedited freight service across the
United States, Canada, and
Mexico. The Company also owns
Celadon Logistics Services, which provides freight brokerage
services, freight management, as well as supply chain management
solutions, including logistics, warehousing, and distribution.
This press release contains certain statements that may be
considered forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of
the Securities Exchange Act of 1934, as amended and such statements
are subject to the safe harbor created by those sections and the
Private Securities Litigation Reform Act of 1995, as amended. Such
statements may be identified by their use of terms or phrases,
including "expects," "expected," "will," "would be," "intends,"
"believes," and similar terms and phrases. Forward-looking
statements are based upon the current beliefs and expectations of
our management and are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified,
which could cause future events and actual results to differ
materially from those set forth in, contemplated by, or underlying
the forward-looking statements. In this press release,
statements relating to the refinancing process, the strategic plan
including asset dispositions and turning around operational and
financial results, adding senior management and independent
directors, and the release of financial results, among others, are
forward-looking statements. Actual results may differ
from those set forth in the forward-looking statements.
Readers should review and consider factors that could impact
results as provided in various disclosures by the Company in its
press releases, stockholder reports, and filings with the
SEC.
For more information:
Joe Weigel
Director of Communications
(317) 972-7006 Direct
jweigel@celadongroup.com
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SOURCE Celadon