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Item 1.01
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Entry into a Material Definitive Agreement.
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Credit Agreement Amendment
On April 12
, 2019, Celadon Group, Inc. (the “Company”) entered into a Sixteenth Amendment to Amended and Restated Credit Agreement (the “Amendment”) by and among the Company, certain subsidiaries of the Company as guarantors, Bank of America, N.A., as lender and Administrative Agent, Wells Fargo Bank, N.A., and Citizens Bank, N.A., both as lenders, which amends the Company's existing Amended and Restated Credit Agreement dated December 12, 2014, among the same parties (as amended, the “Credit Agreement”). Among other changes, the Amendment (i) consented to the disposition of the Company’s Logistics Business (as defined below); (ii) consented to the Company’s entry into a settlement agreement and the making of an initial payment required by such agreement; (iii) deferred to April 30, 2019 the previously scheduled reductions to the aggregate commitments by all lenders (“Aggregate Commitments”), maximum level of outstanding loans and letter of credit obligations (“Maximum Outstanding Amount”), and loan sub-limit (the “Maximum Borrowing Amount”); (iv) provided that upon consummation of the disposition of the Logistics Business each of the Maximum Outstanding Amount and 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; (v) provided that upon consummation of the disposition of the Logistics Business, the Aggregate Commitments would be reduced to an amount equal to the Maximum Outstanding Amount, plus $13.0 million; and (vi) amends financial covenant levels for the Lease-Adjusted Total Debt to EBITDAR Ratio for the April 30, 2019 testing period, Fixed Charge Coverage Ratio for the April 30, 2019 testing period, and Maximum Disbursements for the April 28, 2019 through May 24, 2019 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 Logistics Business disposition, the Aggregate Commitments were approximately $146.2 million, the Maximum Outstanding Amount was approximately $133.2 million, and the Maximum Borrowing Amount was approximately $98.2 million.
The description of the Amendment does not purport to be complete and is qualified in its entirety by the full text of the Amendment, which is filed herewith as Exhibit 10.1.
Disposition of Logistics Business
On April 15, 2019, the Company and its wholly owned subsidiaries, Celadon Trucking Services, Inc., Celadon Logistics Services, Inc., and Hyndman Transport Limited (collectively, the “Sellers”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with TA Dispatch, LLC (the “Buyer”), a PS Logistics, LLC subsidiary, pursuant to which the Buyer purchased substantially all of the assets used in the Company’s Logistics business division (the “Logistics Business”). The Purchase Agreement included an effective financial transfer date of April 1, 2019. The enterprise value for the transaction was approximately $60.0 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, with the proceeds used to reduce borrowings under the Credit Agreement and to provide additional liquidity to the Company. The Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions
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In the fiscal year ended June 30, 2018, the Logistics Business generated approximately $139.0 million in revenue and approximately $10.1 million in operating income. As of December 31, 2018, the Logistics Business had total assets of approximately $30.0 million.
The description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by the full text of the Purchase Agreement, which is filed herewith as Exhibit 10.2.