Celadon Group has announced changes in its top management and a new line of credit, noting that it expects to report a significant operational loss for the first quarter of the year.
The company has promoted Jonathan Russell to president and chief operating officer of Celadon Group, overseeing trucking operations. He had been the president of Celadon Logistics since 2010 and has been with Celadon since 2002. Eric Meek, Celadon’s previous president and COO, has resigned to pursue other interests, according to a Celadon press release.
In addition, Douglas Schmidt has been named president of the Celadon Trucking subsidiary and will oversee the company’s truckload division. Schmidt was previously the president and COO of A&S Kinard, which was acquired by Celadon in 2014.
"I believe we have substantial opportunity to improve the profitability of our operations by ensuring that a greater percentage of our fleet is actively producing at a higher daily level,” said Russell. “Together with Doug Schmidt, who has been instrumental in operating one of our more profitable business units, and the rest of our team, we expect to build on our great customer relationships and high-quality driver corps to deliver improved customer service and financial results. While early in the process, we are energized by the potential impact of our plan."
Celadon has also signed a term sheet for a new $225 million asset-based revolving credit line from Bank of America that is expected to close during the June quarter. It is also amending its existing credit facility to waive potential defaults and provide interim liquidity.
"Our new credit facility, as well as the amendments to our existing facility, will give us the liquidity we need to operate our business assuming we execute against our plan,” said Celadon Chairman and CEO Paul Will.
Celadon Group is expecting to report an operating loss of around $10 million for the quarter, which it is attributing to losses in the company’s irregular route freight operations. The company is also undergoing an audit to review transactions involving revenue equipment held for sale reported in the company’s financial statements for fiscal year 2016 and the quarters ending in September and December after the company’s auditor, BKD, withdrew its reports on previously issued financial statements.
"We continue to work diligently to improve the productivity of our irregular route fleet, access additional liquidity, and provide world-class customer service,” said Will. "While we are disappointed by the preliminary results for the quarter due to poor performance in our irregular route freight business, the recent management changes will strengthen our truckload team, and we are executing a plan to boost operating discipline and achieve positive results.”
Will added that he is "confident the independent audit committee will proceed quickly and thoroughly to investigate the transactions and develop a plan for re-issuing the affected financial statements.”