Celadon Sells Truck Leases for $53 Million

Celadon Sells Truck Leases for $53 Million

Celadon Group plans to reduce its debt by getting out of the truck financing business, selling the leases and assets of about 600 tractors in service with its owner-operators to Element Financial Corp. for approximately $53 million.

Outsourcing its leasing business to Element Financial — which will also provide ongoing financing for independent truckers — will benefit the parent of $681 million truckload carrier Celadon Trucking by paving a route to greater expansion.

“This transaction will allow us to reduce the amount of debt on our balance sheet, while at the same time providing us with the ability to expand and develop our fleet through a more asset-light model,” said Paul Will, Celadon president and CEO.

Celadon Trucking has grown in recent years by acquiring the assets and drivers of smaller truckload carriers, acquiring nine companies in 2013 and increasing its revenue 11.2 percent, according to data from SJ Consulting Group, Pittsburgh.

Celadon will be the 33rd largest trucking operator on the 2014 SJC-Journal of Commerce ranking of the Top 50 Trucking Companies, which will be released April 14. Celadon ranked 35th on last year’s list, after increasing revenue 5.9 percent. It is ranked 18th in JOC's new list of the Top 25 Truckload Carriers.

The pace of acquisition at Celadon pushed up the company’s long-term debt, which rose from $78.1 million last June 30 to $151.9 million by Dec. 31. The sale to Element will reduce debt-to-total capitalization, said Stifel analyst John G. Larkin.

“This will provide the company plenty of opportunity to use the program to recruit drivers and drive organic top-line growth,” Larkin, managing director of Stifel’s transportation and logistics research group, said in a note to investors April 2.

Contact William B. Cassidy at wcassidy@joc.com and follow him on Twitter at @wbcassidy_joc.