||United States : Celadon Group Divests Logistics Business Division
||Celadon Group, Inc. ("Celadon," the "Company," "we," or "us") announced that it has disposed of substantially all of the assets used in its Logistics business division (the "Logistics Division" or "Logistics") in an all cash transaction.
The Company continued its strategic plan to streamline operations, reduce total debt, and focus on its core trucking business by completing the sale of Logistics today, with an effective financial transfer date of April 1, 2019. The purchaser was TA Services, Inc. ("TA Services"), a PS Logistics, LLC ("PS Logistics") subsidiary. PS Logistics is a rapidly growing full-service provider of asset-based transportation, brokerage, 3PL, and supply chain services. The Logistics Division, which provides a full spectrum of freight brokerage, transportation management, and warehousing solutions, contributed approximately $139 million in revenue to the Company in the fiscal year ended June 30, 2018. The proceeds were used to pay transaction expenses, to reduce borrowings under the Company's revolving credit agreement, and to provide additional liquidity.
The transaction will include an ongoing strategic relationship under which the Company will have access to the Logistics platform to continue to serve customers' needs on a revenue sharing basis as well as a commitment for the Company not to conduct independent brokerage operations. The transition of customer relationships, IT, and other activities will be ongoing. Jon Russell, the Company's President and Chief Operating Officer and former President of Logistics, will remain a member of the Company's senior management team, while serving as a consultant to TA Services through the transition process. Post-transition, Mr. Russell is expected to become part of TA Services management team.
Paul Svindland, the Company's Chief Executive Officer, commented: "The sale of Logistics marks another important milestone in executing our strategic plan to simplify our business and reduce debt. Over the past several quarters, we have divested the former Quality business, the joint venture with Element, our flatbed business, our West Coast dedicated business, A&S/Buckler, and now Logistics. Giving effect to these dispositions, the go-forward Celadon has returned to its roots as an asset-based truckload carrier serving the North American market, with particular focus on the eastern half of the United States and cross border traffic with Mexico and Canada. On a pro forma basis, we remain one of the largest industry competitors, with key locations in approximately a dozen states and provinces and a consolidated annual revenue run rate of approximately $550 million.
"From a leverage perspective, this transaction and our recent sale of our A&S Kinard and Buckler subsidiaries have reduced our outstanding borrowings and capital leases by approximately $185 million. We continue to work with existing and new financing sources toward both an extension of our current facility and a longer-term capital structure that will support our ongoing operational and financial improvement efforts."
Mr. Svindland continued, "We expect that TA Services' significant existing footprint and resources, combined with Jon Russell's expertise, will provide an excellent platform for Logistics' continued growth and dedication to excellent customer service. We look forward to the ongoing strategic alignment between our companies and are confident in delivering continued value to our customers as well as an excellent new home for the Logistics employees."
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