Celadon Group Inc. is selling its Celadon Logistics brokerage and third-party logistics subsidiary in a $60 million deal that helps advance the Indianapolis-based company’s plan to shore up its business in the wake of accounting troubles that date back several years.
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The buyer, Mansfield, Texas-based TA Services, is the 3PL and brokerage division of PS Logistics. Celadon Logistics currently operates four logistics offices and 11 warehouses across seven states with over 500 employees, according to a news release from TA Services.
Celadon announced the sale in an April 16 filing with the Securities and Exchange Commission. The deal advances the company’s plan to reduce its financial obligations and get back to its core for-hire trucking business, CFO Thom Albrecht told Transport Topics, and are the latest in a series of asset sales it has pursued. In March, Celadon sold two subsidiaries, A&S Kinard and Buckler Transport, to Day & Ross of News Brunswick, Canada. Albrecht said the two Pennsylvania-based companies were regional players that didn’t exactly mesh with Celadon Group’s goals.
“The sales allow us to greatly reduce debt and get focused on our North American business,” Albrecht said. He noted that Celadon believes it may by October be able to begin reissuing financial reports for 2016, 2017, 2018 and most of 2019.
The ongoing downsizing will probably shrink Celadon revenues to about $550 million a year, he said. For 2018, Celadon ranked No. 35 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. Its annual revenues at that time exceeded $1 billion.
The company has been working to overcome some significant financial challenges. Short-seller Prescience Point Research Group in April 2017 charged that Celadon had overstated the value of trucks donated to an equipment leasing affiliate named Quality Companies Inc. Hundreds of those trucks were held by 19th Capital Group, an entity set up by Celadon and Element Fleet Management to lease vehicles to fleets and owner-operators. Celadon Group stopped issuing reports after that. It was delisted by the New York Stock Exchange last year.
Celadon Group CEO Paul Svindland, brought in after these issues were raised, said last April that the company “just wants to be a boring, old trucking firm. You do that right, and you can make money.” Like Svindland, Albrecht was hired in the wake of the truck-leasing allegations to help guide a turnaround for the company.
The former Celadon Logistics businesses will continue to operate separately during the integration process, which is expected to be less than six months, TA Services officials said. Afterward, all operations will be branded as TA Services.