INDIANAPOLIS, Dec. 30, 2016 /PRNewswire/ -- Celadon Group, Inc.
(NYSE: CGI) ("Celadon") announced today that it has entered into a
joint venture agreement with Element Transportation LLC
("Element"), a subsidiary of Element Fleet Management (TSX: EFN).
The joint venture will hold leasing assets managed by Celadon's
Quality Companies, LLC business unit ("Quality") and formerly held
by a combination of Celadon (including, Element, and
19th Capital Group, LLC ("19th Capital"), a
Delaware limited liability
company.
Company Statement
Chairman and Chief Executive Officer Paul Will commented: "We are very pleased
to announce the closing of our previously announced joint venture
transaction with Element. Since August, we have been working
diligently with the Element team to structure a high quality,
well-capitalized business that will provide excellent
transportation assets and high quality service to our customers.
With the interests and investments of Element and Celadon
strongly aligned, an experienced management team, and the resources
to optimize leasing assets, the joint venture has the components
for success. The support and business acumen of the Element
team were instrumental to the process, and we appreciate their
partnership.
"In addition to capitalizing a strong joint venture, the
transactions furthered Celadon's goals of exiting the capital
intensive component of the leasing business, reducing balance sheet
debt, and converting our Quality Companies unit primarily to an
asset light business. We believe the transaction has
multiple benefits for our stockholders and are excited to be able
to focus our resources on the trucking side of the
business."
"We have built a long-term relationship with Celadon, and we are
excited to deepen our partnership," stated Bradley Nullmeyer, Chief Executive Officer of
Element. "This joint venture expands Element's position in
the Class 8 tractor sector and provides a great opportunity to
broaden our range of fleet services across a larger market, with a
great partner."
About the Joint Venture
The joint venture represents the combination of the former
equipment leasing portfolios of Celadon, Element, and
19th Capital that were managed by Quality. The joint
venture holds over 10,000 tractors for use in leasing operations,
with a business plan focused on leasing to trucking fleets.
The joint venture is considered to be one of the leading lessors to
this market, with an augmented and experienced management team that
is focused on driving excellence throughout the business.
The joint venture was formed through recapitalizing
19th Capital. The former owners of 19th
Capital (including Celadon's former Class A and Class B interests)
were redeemed using pre-transaction cash of 19th
Capital, and new equity was contributed by Celadon and Element to
establish the post-transaction capitalization. Celadon's
contribution includes cash and lease equipment totaling
$100 million in value in exchange for
its equity in the joint venture. The cash component was more
than offset by proceeds of redemption, settlement of the deferred
purchase price on assets sold to 19th Capital in FY2016,
and collection of an amount relating to the terminated pre-joint
venture arrangements. After the contributions, each of
Celadon and Element own approximately 49.99% of the joint venture's
equity, with employees of 19th Capital holding the
remainder.
As part of the transaction, all previous agreements between
Celadon, Element, 19th Capital, and their respective
affiliates, have been terminated or assumed by the joint venture
with no liability of Celadon. Quality has entered into a new
Service Agreement with the joint venture and will provide leasing
management services in exchange for a monthly fee per
tractor.
Additional Information
In addition to closing the joint venture, Celadon received
approximately $50 million in cash
proceeds from the sale of equipment associated with the Quality
business at net book value for use by the joint venture. This
sale and the equity contribution of equipment substantially reduced
the Company's equipment held for sale, leased assets held for sale,
and leased assets.
The Company will file a Form 8-K containing additional
information within the required timeframe.
About Celadon Group
Celadon Group, Inc. (www.celadongroup.com), through its
subsidiaries, provides long-haul, regional, local, dedicated,
intermodal, temperature-protect, flatbed and expedited freight
service across the United States,
Canada and Mexico. The
company also owns Celadon Logistics Services, which provides
freight brokerage services, freight management, as well as supply
chain management solutions, including warehousing and
distribution.
This press release contains certain statements that may be
considered forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of
the Securities Exchange Act of 1934, as amended. Such statements
may be identified by their use of terms or phrases such as
"expects," "estimates," "projects," "believes," "anticipates,"
"plans," "intends," and similar terms and phrases. Forward-looking
statements are based upon the current beliefs and expectations of
our management and are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified,
which could cause future events and actual results to differ
materially from those set forth in, contemplated by, or underlying
the forward-looking statements. Actual results may differ
from those set forth in the forward-looking statements.
Readers should review and consider factors that could impact
results as provided in various disclosures by the company in its
press releases, stockholder reports, and filings with the
Securities and Exchange Commission.
For More Information:
Joe
Weigel
Director of Marketing and Communication
(800) CELADON Ext.
7006
(317) 972-7006 Direct
jweigel@celadontrucking.com
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SOURCE Celadon Group, Inc.