Celadon details terms of $300 million refinancing, amends agreement

By Sarah Lizee

Olympia, Wash., April 23 – Celadon Group, Inc. negotiated terms of the proposed $300 million refinancing of its existing credit agreement and granted exclusivity to a prospective term lender, according to a press release.

As previously reported, the proposed refinancing will consist of a new $100 million asset-based revolving credit facility and a new $200 million term loan and equity issuance.

The new revolver is proposed by existing lenders Bank of America Business Capital and Wells Fargo Capital Finance, LLC, and the new term loan and equity issuance is proposed by an investment firm.

The new term loan lender will also receive 19.5% of fully diluted common stock and have the option of appointing up to two members of the company’s board of directors.

The transaction is expected to close during the June quarter.

Proceeds from the revolver will be used to provide ongoing working capital and general corporate liquidity, and the new term loan will be used to retire existing credit facility borrowings.

“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,” chief executive officer Paul Svindland said in the release.

To facilitate the refinancing, on April 20 the company entered into a ninth amendment to its existing credit agreement in order to extend the existing financial covenant relief through June 15, with the purpose of permitting the company to document and close the refinancing on or before then.

The amendment also reduces the maximum borrowing amount to $189 million and the maximum outstanding amount, which includes borrowings and letters of credit, to $214 million. These limits were determined after considering the company’s projected revolver usage through the refinancing period, Celadon said.

The amendment also provides for the deferral and waiver of some accrued fees if the refinancing occurs on or prior to June 15 and permits dispositions of certain real estate and equipment and increases the amount of net proceeds the company is entitled to reborrow with respect to these transactions.

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

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