Covenant Transportation adjusts credit terms based on Q3 net losses

By Susanna Moon

Chicago, Oct. 7 - Covenant Transportation Group, Inc. amended its credit agreement with Bank of America, NA as agent and JPMorgan Chase Bank, NA as lender, according to an 8-K filing with the Securities and Exchange Commission.

The fixed-charge coverage ratio was adjusted to 0.95 times for the 12 months ended Sept. 30, down from 1x.

"Based on the expected range of net loss [of negative $0.5 million to negative $1.7 million] for the third quarter, and the credit agreement's method of calculating certain revenue equipment transactions and fixed asset amortization, we became aware of the possibility of a covenant violation and worked cooperatively with our lenders to amend the requirement for the month of September," David R. Parker, chairman, president and chief executive officer, said in a release.

"We are presently working with our lenders on a longer-term amendment to the financial covenant calculation that would address our operating and fixed asset expectations as well as the forecast of many economists of a U.S. economy with little or no growth for an extended period."

The company expects to complete a longer-term amendment in the next few weeks.

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

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