Celadon Group credit facility reduced in connection with asset sale

By Angela McDaniels

Tacoma, Wash., April 16 – Celadon Group, Inc. amended its credit agreement on Friday in connection with the disposition of its logistics business, according to an 8-K filing with the Securities and Exchange Commission.

Among other changes, the amendment

• Consented to the disposition, the company’s entry into a settlement agreement and the making of an initial payment required by the disposition agreement;

• Deferred to April 30 the previously scheduled reductions to the aggregate commitments by all lenders, the maximum level of outstanding loans and letter-of-credit obligations and the loan sub-limit (the “maximum borrowing amount”);

• Provided that upon the consummation of the disposition, the aggregate commitments would be reduced to an amount equal to the maximum outstanding amount plus $13 million;

• Provided that upon the consummation of the disposition, each of the maximum outstanding amount and the maximum borrowing amount would be reduced by the greater of (a) $51.1 million and (b) the actual net cash proceeds received by the company in the disposition less $4,138,600; and

• Amends financial covenant levels for the lease-adjusted total debt to EBITDAR ratio for the April 30 testing period, the fixed charge coverage ratio for the April 30 testing period and maximum disbursements for the April 28 through May 24 testing period, primarily to permit potential delays in consummating the logistics business disposition and certain updates to the company’s budget.

After giving effect to the disposition, the aggregate commitments were about $146.2 million, the maximum outstanding amount was about $133.2 million, and the maximum borrowing amount was about $98.2 million.

PS Logistics, LLC subsidiary TA Dispatch, LLC purchased substantially all of the assets used in Celadon’s logistics business division on Monday.

The enterprise value for the transaction was about $60 million, subject to customary post-closing adjustments, after pay down of equipment debt and capital leases, payment of transaction expenses and expected purchase price adjustments

The proceeds were used to reduce borrowings under the credit agreement and to provide additional liquidity to the company.

Bank of America, NA is a lender and the administrative agent. Wells Fargo Bank, NA and Citizens Bank, NA are also lenders.

Celadon provides long-haul, full-truckload freight service and is based in Indianapolis.

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