Celadon Group Inc (OTCMKTS:CGIP) Shoring Up Credit Agreement

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We have never before mentioned Celadon Group Inc (OTCMKTS:CGIP) here on Street Register. Through its subsidiaries, the company 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.

With a Stop Sign designation at OTC Markets for delinquency on SEC filings, the company may send up red flags for many in the investment community, but CGIP has begun the process of cleaning up its books, starting with a new $300M credit facility.

Celadon Group Inc (OTCMKTS:CGIP) and its financing sources have negotiated principal terms of $300 million of new financing expected to close during the June quarter, with its existing credit facility being amended to extend existing financial covenants and provide liquidity through the expected closing date of the new financing.

Chief Executive Officer, Paul Svindland, stated, “I’m pleased to announce that Celadon has negotiated the principal terms of a proposed refinancing of our existing credit agreement and has granted exclusivity to a prospective term lender.  The proposed refinancing has three main parts: a new $100 million revolving credit facility, a new $200 million term loan and equity issuance, and the extension of certain tractor lease maturities.  We have been engaged with the lenders under the prospective facilities for several months, and we believe they thoroughly understand our business, our near-term hurdles, and our long-term opportunities. We appreciate their partnership and are confident that they will work diligently with us with a goal of closing the transaction by the end of our June quarter.  During this time, we will have the resources and liquidity we need to continue to provide excellent customer service and support our professional truck drivers and employees, while capitalizing on the robust freight environment.”

The new revolving credit facility is proposed by Bank of America Business Capital, a business unit within Bank of America, N.A., one of the Company’s existing credit facility lenders, and Wells Fargo Capital Finance, LLC, an affiliate of Wells Fargo Bank, National Association, another of the Company’s existing credit facility lenders.  The new term loan and equity issuance is proposed by a sophisticated investment firm that has a good appreciation for the trucking industry.

The lenders for the potential new facilities and the Company have not made legally binding commitments to enter into the described transactions.  We expect that the closing of the refinancing and associated transactions will be subject to simultaneous closing of the ABL facility, the term loan and equity issuance, and the amendment and extension of certain tractor leases, as well as other customary closing conditions such as minimum available liquidity, due diligence, definitive documentation, and board and credit committee approvals.  We do not expect the issuance of restated financial statements to be a condition to closing. (Source; PR Newswire)

We will want to follow along with the company’s efforts to attain a new credit facility, as well as keeping an eye out for moves to come current on its reporting with OTC Markets, effecting the removal of the stop sign and suqsequentre-commencement of quotes.Keep it locked to Street Register for updates, and we’ll deliver important developments on CGIP to you as they unfold. In the meantime, if you’ve yet to sign up for our 100% free newsletter, do so now! Just enter your active email address into the box below and submit!

Disclosure: No one at Street Register has been compensated in any way for the publishing of this article, nor do we hold any position in CGIP stock, short or long.

 

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