UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

April 25, 2017

 

CELADON GROUP, INC.

(Exact name of registrant as specified in its charter)

(317) 972-7000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2).

Item 1.01

Entry into a Material Definitive Agreement.

(a) On May 1, 2017, Celadon Group, Inc. (the “Company”) entered into a Fourth Amendment  to Amended and Restated Credit Agreement and Waiver (the “Amendment”) by and among the Company, certain subsidiaries of the Company as guarantors, Bank of America, N.A., as Administrative Agent (the “Agent”), Wells Fargo Bank, N.A., and Citizens Bank, N.A., both as lenders, which amends the Company’s existing Amended and Restated Credit Agreement dated December 12, 2014, among the same parties (the “Credit Agreement”).  Among other changes, the Amendment (i) waived certain defaults that may have occurred as a result of (a) the Company’s noncompliance with financial covenants for the period ended March 31, 2017, (b) the granting of an unperfected lien upon vehicles encumbered by third party financing, including the elimination of any such lien, and (c) the events described under Item 4.02 below (the “Audit Events”); (ii) qualified certain representations contained in the Credit Agreement with disclosure of the Audit Events until the Audit Events are resolved or September 30, 2017, whichever is earlier; (iii) adjusted interest rates and other pricing to reflect a single set of rates set forth in the table below; (iv) reduced the maximum amount of outstanding indebtedness under the Credit Agreement to $200,000,000 (subject to further reduction with the proceeds of certain real estate dispositions or financings); (v) added a requirement that the Company pay down outstanding borrowings under the Credit Agreement to the extent that the Company’s cash liquidity exceeds $10,000,000 for four consecutive business days; (vi) amended the asset coverage ratio financial covenant to a ratio of 0.90 to 1.00 for periods prior to June 30, 2017; (vii) conditioned further borrowings on the Company’s cash liquidity not exceeding $10,000,000, after giving effect to the anticipated borrowing net of the applicable use of proceeds; (viii) added supplemental financial reporting obligations and requirements to deliver certain security documents to perfect the Agent’s liens; (ix) eliminated provisions permitting dividends and stock buybacks, such that the Company is now generally prohibited from declaring dividends or engaging in stock buybacks; and (x) placed certain limitations on the Company’s capital expenditures.  The new pricing under the Credit Facility is as follows:

The description of the Amendment does not purport to be complete and is qualified in its entirety by the full text of the Amendment, which is filed herewith as Exhibit 10.1.

Item 4.02

Non-Reliance on Previously Issued Statements or a Related Audit Report or Completed Interim Review.

(a) and (b)  On April 25, 2017, BKD, LLP (“BKD”), the independent auditors for the Company, informed the chair of the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) that it was withdrawing its reports on the June 30, 2016, September 30, 2016, and December 31, 2016 financial statements of the Company, and that those reports should no longer be relied upon.  BKD advised the Company that additional information relating to transactions involving revenue equipment held for sale had come to BKD’s attention subsequent to BKD’s issuance of its audit report on the Company’s June 30, 2016 financial statements and after the issuance of BKD’s review reports on the Company’s September 30, 2016 and December 31, 2016 interim financial statements.  BKD further advised the Company that, in accordance with PCAOB Auditing Standard 2905, BKD had performed procedures to evaluate this information, including requesting explanations and supporting documentation from the Company’s management.  Based on the results of BKD’s procedures, BKD advised the Company that BKD has been unable to obtain sufficient appropriate audit evidence to provide a reasonable basis to support its previously issued reports for the periods indicated above.  As a result, as of May 1, 2017, the Audit Committee has concluded that the Company’s financial statements for the fiscal year ended June 30, 2016 and quarters ended September 30 and December 31, 2016, and related reports of BKD, should not be relied upon.

 

The Company has provided BKD a copy of this Form 8-K and requested BKD to furnish a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements made in Item 4.02 of this Form 8-K, and, if not, stating the respects in which it does not agree.  The Company has requested that BKD provide such letter as soon as possible, so that the Company can file such letter as an Exhibit to this Current Report on an amended Form 8-K within the time period prescribed by the Securities and Exchange Commission.

 

Item 9.01          Financial Statements and Exhibits.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX