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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndianapolis-based Celadon Group Inc. on Wednesday announced that it has obtained $165 million in new financing that it plans to use to update its aging trucking fleet.
The financing is coming from $105 million in terms loans and $60 million from refinancing its former revolving credit facility, the struggling company said.
“This financing provides a solid platform for the next stage of our business turnaround,” Celadon CEO Paul Svindland said in written comments. “A strong capital base is critical to providing dependable service for customers, a modern fleet for our drivers, and a stable home for all Celadon associates.”
The company plans to replace about 2,000 4-year-old and 5-year-old tractors with new units. The company said 100 new trucks have been delivered since May, another 100 are scheduled for August, and about 1,800 more are expected to arrive over the next several quarters.
“These new trucks will dramatically lower our costs, enhance productivity, and improve the lives and safety of our professional drivers,” Svindland said. “Beyond the fleet refresh, we must return to our historical roots as a high-service, low cost provider to our customers. We will have all the tools, and it is now up to our team to execute our plan.”
In April, Celadon agreed to pay $42.2 million in restitution to settle securities fraud charges from the U.S. Department of Justice. Under the settlement, the company acknowledged “filing materially false and misleading statements to investors and falsifying books, records and accounts,” federal prosecutors said.
The company has made several divestures in recent months in an effort to concentrate on its core business.
“As a company, we are highly energized by the opportunities ahead,” Svindland said. “Over the past two years, we have exited several business units and become a focused North American truckload transportation company. Despite numerous headwinds, including an older tractor fleet, we have achieved meaningful improvements in revenue per seated tractor, customer service, and safety.”
Svindland said the company expects to complete its financial statement audit during the second or third quarter of fiscal 2020.
“Promptly thereafter, we intend to resume filing financial reports with the SEC and to seek a listing on a national stock exchange,” he said.
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