January 2, 2018 2:00 PM, EST
Celadon Gets March 31 Extension on Credit Lines
Arrangement Calls for Carrier to Pay Higher Interest Rate to Banks
Celadon headquarters John Sommers II for Transport Topics

Celadon Group has again received an extension on its revolving credit line from a group of lenders led by Bank of America.

The agreement was reached Dec. 22, and resets the financial covenants — the terms and conditions — to last through March 31.

Celadon also said the maximum borrowing amount will increase from about $192 million to $205 million and the maximum outstanding bill to $230 million from $226.3 million.

In exchange, Celadon agreed to a higher interest rate on the borrowed money. It now will equal the greater of 8% or the prime rate plus 3.75%. As of Dec. 17, Bank of America's prime rate was 4.5%.

Banks commonly adjust their prime rates in December, raising them in recent years. One year ago, most of the large institutional banks offered a prime rate of 3.75%.

“This amendment represents another important step towards refinancing our existing credit facility," CEO Paul Svindland said in a statement. "We expect the financial covenant relief and additional borrowing capacity to provide an appropriate time period for the refinancing process. Management continues to work diligently towards accomplishing a refinancing as early as possible.”

The amendment also adjusted the benchmark on the asset coverage ratio up to 1.05, a calculation of the company’s ability to cover its debt with assets on its balance sheet after other liabilities have been wiped away.