Covenant Transportation Group amends, extends $85 million revolver

By Angela McDaniels

Tacoma, Wash., Sept. 7 - Covenant Transportation Group, Inc. amended and extended its $85 million revolving credit facility on Aug. 31, according to an 8-K filing with the Securities and Exchange Commission.

The maturity date was extended by three years to September 2014.

The spread over Libor was lowered to 300 basis points when availability is less than $20 million, 275 bps when availability is $20 million to $35 million, 250 bps when availability is $35 million to $70 million and 225 bps when availability is more than $70 million.

In each case, the spread was lowered by 125 bps.

"Based on our $44.6 million of availability under the facility at June 30, 2010, the effective interest rate on outstanding borrowings would have been reduced by 245 basis points, the letter of credit fees would have been reduced by 125 basis points and the unused line fees would have been reduced by 25 basis points under the amended facility," chairman, president and chief executive officer David R. Parker said in a company news release.

The amendment also:

• Eliminated the Libor floor on the interest rate grid;

• Improved the unused line fee pricing to 50 bps per year when availability is less than $50 million and 75 bps per year when availability is $50 million or more. Previously the fee was 50 bps when availability was less than $42.5 million and 75 bps otherwise;

• Reduced the field exam frequency from three field examinations of any borrower's books and records and three appraisals of pledged equipment to two examinations and two appraisals, respectively;

• Decreased the frequency of borrowing base certificates to monthly from weekly, provided that no default exists and availability is more than $15 million.

"Our sole financial covenant did not change in the amendment, and based on our financial and operating expectations, we expect to comply with the applicable financial covenant for the foreseeable future," Parker said in the release.

The company paid a $425,000 amendment fee.

Bank of America, NA is the administrative agent. It and JPMorgan Chase Bank, NA are the lenders.

Covenant Transportation is the holding company for several transportation providers. It is based in Chattanooga, Tenn.

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