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Celadon’s financial-reporting issues worse than expected
Posted on Wednesday, April 04 @ 20:10:25 CEST by admin

Trucking News

GREENFIELD — A company that planned — then scrapped — a $28 million project to relocate its corporate headquarters to Hancock County says its financial issues are older and deeper than expected.

Indianapolis-based Celadon Group Inc. launched an internal investigation into financial reporting issues nearly a year ago. The trucking company on Monday said the problems are so extensive that it won’t be able to resolve them in time to avoid being delisted from the New York Stock Exchange. It also said it likely overstated some of its earnings by as much as $250 million during a three-year period that ended in 2016.

In May 2017, Celadon revealed that its auditor, BKD LLP, had raised questions about a complicated joint-venture arrangement that involved the sale of leased equipment. As a result, the company said at the time, its past 18 months of financial statements should not be relied upon. Celadon’s board hired outside firms to review the statements.

In a statement issued late Monday, Celadon said the investigation has revealed “errors that will require adjustments to the previously issued 2014, 2015, 2016 and 2017 financial statements” and to statements potentially even older than that.

Most of the adjustments relate to equipment sales that took place between former Celadon subsidiary Quality Cos. and 19th Capital, a joint venture between Celadon and the Pennsylvania-based private equity firm Larsen MacColl Partners. Also involved was another joint venture formed by Celadon and Canada-based Element Fleet Management.

Adjustments related to these transactions are expected to reduce Celadon’s earnings before income taxes by a cumulative $200 million to $250 million over the three-year period ending June 30, 2016, the company said.

Celadon disposed of Quality Cos. in 2017. Most of the company’s senior leadership team, including its CEO and CFO, have been replaced over the past year.

“The accounting adjustments will be significant to prior period earnings and to our total stockholders’ equity. Nevertheless, we remain confident in our current management team and strategic plan,” CEO Paul Svindland said in a written statement.

The company said the internal investigation is “nearing completion but remains ongoing.”

Celadon leaders had worked to develop a 140-acre site at the intersection of Mt. Comfort Road and West County Road 300N, where construction had begun on a 75,000-square-foot building. The trucking business had promised to bring up to 900 jobs to the county before calling off its plans in October.

At that time, Celadon disclosed that it was under investigation by the U.S. Securities and Exchange Commission. Monday’s statement did not mention the status of the investigation.

Because of the number of financial reports that must be restated, Celadon said it won’t be able to reissue these reports by the May 2 deadline imposed by the New York Stock Exchange. The exchange warned the company in May of a potential delisting for financial reporting failures. It gave the company a six-month extension to resolve the issues in October.

Shares of Celadon closed at $3.45 each Monday. The NYSE halted trading of Celadon on Tuesday.

Celadon said it will remain subject to the Security and Exchange Commission’s public reporting requirements, and that it expects that its stock will be quoted on the OTC Pink market operated by OTC Markets Group Inc.

Also in Monday’s statement, Celadon said it entered into the eighth amendment of its credit agreement with lenders while working toward a new $100 million asset-based revolving credit facility with Bank of America Business Credit and Wells Fargo Capital Finance.

Source of article click here : Daily Reporter

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