Trucker Celadon Gets $165 Million in New Financing
Trucking company Celadon Group Inc. has received $165 million in new financing that the company said will help its turnaround efforts.
An unidentified shareholder is providing part of the debt and could snag as much as a 49.9% stake as a result.
The shareholder is set to receive warrants to buy 16 million common shares that are exercisable immediately as part of the deal. Fully exercised, the warrants would account for about a third of the company’s fully diluted equity and would give the lender a roughly 49.9% stake in the company, Celadon said.
The new financing includes a $105 million in term loans and a revolving credit facility of $60 million.
The shareholder is also receiving warrants to buy 5.5 million shares that become exercisable in the case of a change of control.
Chief Executive Paul Svindland declined to name the shareholder, but said in an email the company would disclose additional information in a coming securities filing.
Celadon shares, which trade over the counter, rose more than 20% on Thursday to $1.55.
The company had been exploring ways to pay off an existing line of credit from Bank of America Corp. , Wells Fargo & Co. and Citizens Financial Group Inc. In late June, Celadon and the banks agreed to extend the maturity date on the $122.9 million credit to July 31.
Celadon has been working on a turnaround and Mr. Svindland said in a press release that the next step is to replace roughly 2,000 four- and five-year-old tractors. Since May, the company has added 100 new trucks with another 100 scheduled for this month. An additional 1,800 are expected in coming quarters, Mr. Svindland said.
In April, Celadon agreed to pay $42.2 million to settle fraud claims after filing false financial statements and lying to auditors in efforts to hide losses of its aging trucking fleet.
The company admitted to inflating the value of more than 1,000 used trucks through false transactions with a third party, the Justice Department and the Securities and Exchange Commission said at the time.
Under the terms of the Justice Department agreement, Celadon is required to pay restitution to shareholders. Celadon also agreed to implement internal controls and cooperate with the continuing probe, which includes investigations of individuals. The company no longer employs the executives involved in wrongdoing, the Justice Department said.
The company hasn’t filed financial statements with the SEC since February 2017 and is working to restate several years of its results. The company’s stock was delisted from the New York Stock Exchange last year.
On Thursday, the company said it expects to complete its financial statement audit during the second or third quarter of fiscal 2020. Celadon said it would then seek to relist on a national stock exchange.
—Aisha Al-Muslim contributed to this article.
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