Celadon Group amends credit agreement to modify financial covenants

By Sarah Lizee

Olympia, Wash., April 3 – Celadon Group, Inc. entered into an eighth amendment to its credit agreement dated Dec. 12, 2014 on March 30 to modify the financial covenants, according to an 8-K filing with the Securities and Exchange Commission.

Bank of America, NA, Wells Fargo Bank, NA and Citizens Bank, NA are lenders, with Bank of America as administrative agent.

The amendment changed the lease adjusted total debt to EBITDAR ratio and fixed charge coverage ratio financial covenants so that those covenants would not be tested for the 12-month period ended March 31. Testing will resume for the 12-month period ending June 30.

The asset coverage ratio financial covenant was amended so that a ratio of 1.05 to 1 is required for periods prior to April 30, and 1.85 to 1 for each week ending after that.

The amendment increased the value of real estate that can be included for purposes of calculating the asset coverage ratio to $85 million from $78.2 million.

Other financial covenant levels for the months of March and April 2018 were reset.

The amendment also provided additional exceptions to representation and warranties regarding the company’s financial statements to reflect an ongoing internal investigation.

A prohibition was added on any single disposition, or series of related dispositions, of assets having a fair market value in excess of $50,000, without obtaining the consent of the required lenders. Also added was a requirement that the proceeds of any asset disposition permanently pay down outstanding borrowings, as well as a requirement for the company to deliver to the lenders an updated refinancing plan and financial forecast on or before April 13.

The company is required to pay roughly $2.6 million of previously accrued fees. The amendment deferred the payment date for $5.95 million of previously accrued fees to April 30.

There is an amendment fee of $2.76 million payable on April 30.

Celadon announced in a Monday press release that it is currently working toward a new $100 million asset-based revolving credit facility with Bank of America Business Credit and Wells Fargo Capital Finance.

The company said the amendment was prompted by a refinancing proposal received on March 31 that is currently being reviewed by the company and revolving lenders. The proposal anticipates retiring all principal and interest under the company’s existing facility.

The proposal includes about $200 million of term debt plus an issuance of common equity without additional consideration. If accepted, the new revolving credit facility and term loan proposal would be expected to close during the fourth fiscal quarter.

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

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