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.