Over the past several months, Covenant has been working to replace its prior financing arrangements with more flexible and longer term arrangements -- not necessarily an easy task in today's credit environment.
"We are very pleased to announce substantial completion of this process through closing an $85 million amended and restated revolving credit facility led by Bank of America, J.P. Morgan Chase, and Textron Financial," said Senior Vice President and Treasurer M. David Hughes. "Together with the previously announced approximately $200 million secured revenue equipment financing facility through Daimler Truck Finance, we have completed the substantial majority of our refinancing efforts.
"The achievement of this portion of our financing program is a major achievement for CTG, and to complete it in the middle of a global credit crisis is even more meaningful. Since June, we have obtained approximately $285 million in new financing and financing commitments from some of the world's largest and most respected organizations. We appreciate the expression of confidence and support from all of these institutions. We feel comfortable with our current liquidity and financing availability, while we are still in the position to further pursue additional financing that would be secured by some of our terminal facilities."
The company also said it expects negative developments in the quarter so far to offset positive developments. On the positive side is better asset utilization than a year ago, with Covenant expecting revenue per tractor to be about 6 percent higher. The increase in miles per tractor is primarily attributable to an increase in the percentage of the fleet allocated to our team expedited operation and more effective dispatching. "The freight environment remains weak and, if anything, seems to be deteriorating on a seasonally adjusted basis," said Chairman, President and CEO David R. Parker,
Fuel expense is improving; the combination of the decrease in diesel fuel prices, improved surcharge collection from customers, a decrease in non- revenue miles, and several initiatives designed to reduce fuel consumption to return the company's cost per mile for net fuel expense approximately to the same level as the third quarter of 2007.
Safety and claims expense is a mixed bag for the company. Through September 26, Covenant's reportable accident rate per million miles for the quarter reflected the best performance in several years. But a small number of the accidents it did experience were severe, and the company expects to record between $0.11 and $0.14 per mile for insurance and claims expense for the quarter.
"From an income statement perspective, compared with the second quarter of 2008, we believe the few items discussed above may contribute approximately $.20 per share in positive developments, more than offset by over $.30 per share in negative developments discussed above," Parker said.