INDIANAPOLIS, IN – Celadon Group has shuffled its senior management team as 2016 financial statements are reviewed and the company faces a US $10 million operating loss during the first quarter of 2017.
Jonathon Russell has been promoted to president and Chief Operating Officer, in roles that will have him oversee all trucking operations. Douglas Schmidt has been promoted to president of Celadon Trucking and will oversee the truckload division. Russell, the son of late founder Stephen Russell, has most recently been president of Celadon Logistics. Schmidt previously served as president and Chief Operating Officer of A&S Kinard, which was acquired by Celadon in 2014.
The anticipated operating loss in the first quarter is primarily attributed to losses in irregular route freight operations. Regional, dedicated, logistics, and certain specialized businesses excluding flatbed and temperature-controlled freight were all profitable, the company says in a press release.
Celadon has signed a term sheet for a new US $225 million asset-based revolving credit facility for working capital and general corporate needs. That is expected to close this June. An existing credit facility was also amended to waive potential defaults and provide some interim liquidity.
The financial statements being reviewed are for the fiscal year ended June 30, 2016, and the two quarters that followed. The company’s audit committee is working with independent legal and accounting teams to review transactions that involved revenue equipment held for sale after the business’ 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. 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,” said chairman and Chief Executive Officer Paul Will. “The board and I are confident that Jon Russell and Doug Schmidt have the expertise to guide the truckload business through this period making it stronger and more efficient.”
“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. While management remains focused on running the business, I am 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. We will continue to deliver value to our thousands of customers, employees, investors and other business partners every day. We deeply appreciate their support as we move toward the busy summer season,” he said.
About $45 million in revenue equipment was reportedly held for sale as of June 30, 2016, $29 million on September 30, and zero as of the year end. It was all sold to third parties or contributed to the 19th Capital Group joint venture before December 31.