Celadon Group Inc. said today that its lenders have amended the terms of its revolving credit line to provide the troubled trucking and logistics provider more financial flexibility to restructure its debt.
The agreement, reached last Friday, raises the maximum amount of Celadon's credit line by $26 million, up from $200 million. Celadon's lenders will waive compliance with certain covenants until Sept. 30, the Indianapolis-based company said in a statement.
Celadon, the seventh-largest truckload carrier in the U.S., ran into trouble in early May when it projected a $10 million operating loss in its fiscal third quarter ending March 31. The company also delayed issuing its fiscal third-quarter results after disclosing earlier this month that financial statements for the past six quarters ending last Dec. 31 should not be relied upon. It has yet to issue results for the quarter.
Eric Meek, Celadon's former president and CEO, resigned in the wake of the results. Jon Russell, son of Steve Russell, Celadon's late founder, was named to run truckload operations.
Company executives blamed the quarterly loss on poor management of its core truckload business, in particular the handling of owner-operators. Celadon's finances have also been thrown into question by an unprofitable joint venture involving its truck-leasing division. The company said it expects to record a $7.8 million pretax equity loss in the March quarter from its interest in the venture, and another loss in the fiscal fourth quarter, which ended on Friday. It did not disclose the extent of the projected fiscal fourth-quarter equity loss.
Paul Will, Celadon's chairman and CEO, said in the statement that most of Celadon's key operating metrics, which include revenue per truck per day and fleet-size trends, have been showing sequential improvement. Will added that Celadon has experienced its highest driver recruiting classes in recent history.
