CELADON GROUP, INC. (NYSE:CGI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive Agreement.
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(a) On May 1, 2017, Celadon Group, Inc. (the Company) entered
into a Fourth Amendment to Amended and Restated Credit Agreement
and Waiver (the Amendment) by and among the Company, certain
subsidiaries of the Company as guarantors, Bank of America, N.A.,
as Administrative Agent (the Agent), Wells Fargo Bank, N.A., and
Citizens Bank, N.A., both as lenders, which amends the Companys
existing Amended and Restated Credit Agreement dated December 12,
2014, among the same parties (the Credit Agreement). Among other
changes, the Amendment (i) waived certain defaults that may have
occurred as a result of (a) the Companys noncompliance with
financial covenants for the period ended March 31, 2017, (b) the
granting of an unperfected lien upon vehicles encumbered by third
party financing, including the elimination of any such lien, and
(c) the events described under Item 4.02 below (the Audit
Events); (ii) qualified certain representations contained in the
Credit Agreement with disclosure of the Audit Events until the
Audit Events are resolved or September 30, 2017, whichever is
earlier; (iii) adjusted interest rates and other pricing to
reflect a single set of rates set forth in the table below; (iv)
reduced the maximum amount of outstanding indebtedness under the
Credit Agreement to $200,000,000 (subject to further reduction
with the proceeds of certain real estate dispositions or
financings); (v) added a requirement that the Company pay down
outstanding borrowings under the Credit Agreement to the extent
that the Companys cash liquidity exceeds $10,000,000 for four
consecutive business days; (vi) amended the asset coverage ratio
financial covenant to a ratio of 0.90 to 1.00 for periods prior
to June 30, 2017; (vii) conditioned further borrowings on the
Companys cash liquidity not exceeding $10,000,000, after giving
effect to the anticipated borrowing net of the applicable use of
proceeds; (viii) added supplemental financial reporting
obligations and requirements to deliver certain security
documents to perfect the Agents liens; (ix) eliminated provisions
permitting dividends and stock buybacks, such that the Company is
now generally prohibited from declaring dividends or engaging in
stock buybacks; and (x) placed certain limitations on the
Companys capital expenditures. The new pricing under the Credit
Facility is as follows:
into a Fourth Amendment to Amended and Restated Credit Agreement
and Waiver (the Amendment) by and among the Company, certain
subsidiaries of the Company as guarantors, Bank of America, N.A.,
as Administrative Agent (the Agent), Wells Fargo Bank, N.A., and
Citizens Bank, N.A., both as lenders, which amends the Companys
existing Amended and Restated Credit Agreement dated December 12,
2014, among the same parties (the Credit Agreement). Among other
changes, the Amendment (i) waived certain defaults that may have
occurred as a result of (a) the Companys noncompliance with
financial covenants for the period ended March 31, 2017, (b) the
granting of an unperfected lien upon vehicles encumbered by third
party financing, including the elimination of any such lien, and
(c) the events described under Item 4.02 below (the Audit
Events); (ii) qualified certain representations contained in the
Credit Agreement with disclosure of the Audit Events until the
Audit Events are resolved or September 30, 2017, whichever is
earlier; (iii) adjusted interest rates and other pricing to
reflect a single set of rates set forth in the table below; (iv)
reduced the maximum amount of outstanding indebtedness under the
Credit Agreement to $200,000,000 (subject to further reduction
with the proceeds of certain real estate dispositions or
financings); (v) added a requirement that the Company pay down
outstanding borrowings under the Credit Agreement to the extent
that the Companys cash liquidity exceeds $10,000,000 for four
consecutive business days; (vi) amended the asset coverage ratio
financial covenant to a ratio of 0.90 to 1.00 for periods prior
to June 30, 2017; (vii) conditioned further borrowings on the
Companys cash liquidity not exceeding $10,000,000, after giving
effect to the anticipated borrowing net of the applicable use of
proceeds; (viii) added supplemental financial reporting
obligations and requirements to deliver certain security
documents to perfect the Agents liens; (ix) eliminated provisions
permitting dividends and stock buybacks, such that the Company is
now generally prohibited from declaring dividends or engaging in
stock buybacks; and (x) placed certain limitations on the
Companys capital expenditures. The new pricing under the Credit
Facility is as follows:
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Commitment
Fee
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LIBOR
Floating Rate
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Eurodollar
Rate
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Letters of
Credit
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Base
Rate
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.15%
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2.25%
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2.25%
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2.25%
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1.25%
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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.
and is qualified in its entirety by the full text of the
Amendment, which is filed herewith as Exhibit 10.1.
| Item 4.02 |
Non-Reliance on Previously Issued Statements or a Related
Audit Report or Completed Interim Review. |
(a) and (b) On April 25, 2017, BKD, LLP (BKD), the independent
auditors for the Company, informed the chair of the Audit
Committee of the Companys Board of Directors (the Audit
Committee) that it was withdrawing its reports on the June 30,
2016, September 30, 2016, and December 31, 2016 financial
statements of the Company, and that those reports should no
longer be relied upon. BKD advised the Company that additional
information relating to transactions involving revenue equipment
held for sale had come to BKDs attention subsequent to BKDs
issuance of its audit report on the Companys June 30, 2016
financial statements and after the issuance of BKDs review
reports on the Companys September 30, 2016 and December 31, 2016
interim financial statements. BKD further advised the Company
that, in accordance with PCAOB Auditing Standard 2905, BKD had
performed procedures to evaluate this information, including
requesting explanations and supporting documentation from the
Companys management. Based on the results of BKDs procedures, BKD
advised the Company that BKD has been unable to obtain sufficient
appropriate audit evidence to provide a reasonable basis to
support its previously issued reports for the periods indicated
above. As a result, as of May 1, 2017, the Audit Committee has
concluded that the Companys financial statements for the fiscal
year ended June 30, 2016 and quarters ended September 30 and
December 31, 2016, and related reports of BKD, should not be
relied upon.
auditors for the Company, informed the chair of the Audit
Committee of the Companys Board of Directors (the Audit
Committee) that it was withdrawing its reports on the June 30,
2016, September 30, 2016, and December 31, 2016 financial
statements of the Company, and that those reports should no
longer be relied upon. BKD advised the Company that additional
information relating to transactions involving revenue equipment
held for sale had come to BKDs attention subsequent to BKDs
issuance of its audit report on the Companys June 30, 2016
financial statements and after the issuance of BKDs review
reports on the Companys September 30, 2016 and December 31, 2016
interim financial statements. BKD further advised the Company
that, in accordance with PCAOB Auditing Standard 2905, BKD had
performed procedures to evaluate this information, including
requesting explanations and supporting documentation from the
Companys management. Based on the results of BKDs procedures, BKD
advised the Company that BKD has been unable to obtain sufficient
appropriate audit evidence to provide a reasonable basis to
support its previously issued reports for the periods indicated
above. As a result, as of May 1, 2017, the Audit Committee has
concluded that the Companys financial statements for the fiscal
year ended June 30, 2016 and quarters ended September 30 and
December 31, 2016, and related reports of BKD, should not be
relied upon.
The Audit Committee has discussed with BKD the matters
disclosed under this Item 4.02. Based on these discussions, the
Company understands the following: (i) BKD has not resigned as
the Company’s auditor; (ii) BKD has determined that it has not
obtained sufficient appropriate audit evidence with respect to
the revenue equipment held for sale transactions to determine
that those transactions were properly recorded in accordance
with GAAP; and (iii) BKD is prepared to review additional
information, if any, and adjustments to the Companys financial
statements, if any, and to then consider whether to re-issue
the withdrawn reports.
disclosed under this Item 4.02. Based on these discussions, the
Company understands the following: (i) BKD has not resigned as
the Company’s auditor; (ii) BKD has determined that it has not
obtained sufficient appropriate audit evidence with respect to
the revenue equipment held for sale transactions to determine
that those transactions were properly recorded in accordance
with GAAP; and (iii) BKD is prepared to review additional
information, if any, and adjustments to the Companys financial
statements, if any, and to then consider whether to re-issue
the withdrawn reports.
The insufficient appropriate audit evidence relates to the
accounting (and related structure, substance, and disclosure)
of transactions involving dispositions and acquisitions of
revenue equipment between June and December of 2016 and the
related carrying values. Additional information concerning the
transactions and the fair values of the revenue equipment
disposed of and acquired is required to determine the
appropriateness of the accounting for these transactions. The
need for additional information followed an Audit Committee
request of BKD to perform additional procedures on the
transactions prior to the normal audit cycle for fiscal 2017.
accounting (and related structure, substance, and disclosure)
of transactions involving dispositions and acquisitions of
revenue equipment between June and December of 2016 and the
related carrying values. Additional information concerning the
transactions and the fair values of the revenue equipment
disposed of and acquired is required to determine the
appropriateness of the accounting for these transactions. The
need for additional information followed an Audit Committee
request of BKD to perform additional procedures on the
transactions prior to the normal audit cycle for fiscal 2017.
The Company has provided BKD a copy of this Form 8-K and
requested BKD to furnish a letter addressed to the Securities and
Exchange Commission stating whether it agrees with the statements
made in Item 4.02 of this Form 8-K, and, if not, stating the
respects in which it does not agree. The Company has requested
that BKD provide such letter as soon as possible, so that the
Company can file such letter as an Exhibit to this Current Report
on an amended Form 8-K within the time period prescribed by the
Securities and Exchange Commission.
requested BKD to furnish a letter addressed to the Securities and
Exchange Commission stating whether it agrees with the statements
made in Item 4.02 of this Form 8-K, and, if not, stating the
respects in which it does not agree. The Company has requested
that BKD provide such letter as soon as possible, so that the
Company can file such letter as an Exhibit to this Current Report
on an amended Form 8-K within the time period prescribed by the
Securities and Exchange Commission.
Item 9.01 Financial Statements and Exhibits.
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(d)
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Exhibits.
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EXHIBIT
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NUMBER
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EXHIBIT DESCRIPTION
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7.1
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Letter from BKD, LLP dated April 25, 2017
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10.1
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Fourth Amendment to Amended and Restated Credit Agreement
dated May 1, 2017 |
The information contained in this report contains
forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act and such
statements are subject to the safe harbor created by those
sections and the Private Securities Litigation Reform Act of
1995, as amended. Such statements are made based on the current
beliefs and expectations of the Companys management and are
subject to significant risks and uncertainties. Actual results
or events may differ from those anticipated by forward-looking
statements. Please refer to various disclosures by the Company
in its press releases, stockholder reports, and filings with
the Securities and Exchange Commission for information
concerning risks, uncertainties, and other factors that may
affect future results.
forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act and such
statements are subject to the safe harbor created by those
sections and the Private Securities Litigation Reform Act of
1995, as amended. Such statements are made based on the current
beliefs and expectations of the Companys management and are
subject to significant risks and uncertainties. Actual results
or events may differ from those anticipated by forward-looking
statements. Please refer to various disclosures by the Company
in its press releases, stockholder reports, and filings with
the Securities and Exchange Commission for information
concerning risks, uncertainties, and other factors that may
affect future results.
About CELADON GROUP, INC. (NYSE:CGI)
Celadon Group, Inc. (Celadon) is a truckload freight transportation provider. The Company’s segments are asset-based, asset-light, and equipment leasing and services. Its services involve point-to-point shipping for its customers within the United States, between the United States and Mexico, and between the United States and Canada. The Company’s primary asset-based services include the United States domestic dry van, refrigerated and flatbed service; cross-border service between the United States and each of Mexico and Canada; intra-Mexico and intra-Canada service; contract service; regional and specialized short haul service, and rail intermodal service. The Company’s primary asset-light services include freight brokerage, warehousing, less-than truckload consolidation and supply chain logistics services. Celadon’s equipment leasing and services segment consists primarily of leasing activities with independent contractors and other trucking fleets. CELADON GROUP, INC. (NYSE:CGI) Recent Trading Information
CELADON GROUP, INC. (NYSE:CGI) closed its last trading session up +0.05 at 4.00 with 598,540 shares trading hands.
