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