Monday, December 16, 2019

Celadon Trucking Fell To Corporate Raiders

I'm a retired long haul trucker. I've experienced a company leaving me stranded far from home. I learned early on to always have money enough to get home in my pocket because hitchhiking sucks. And I learned the signs of a company that is going under soon. The one thing I have noticed about the Celadon Trucking bankruptcy story is that no one in media has connected the dots.

Article after article has pointed to the 2016 accounting scandal in which the value of Celadon's equipment was inflated in order to push up share prices but the persons responsible for the fraud were caught in 2016, fired that same year, and according to the Wall Street Journal, Celadon settled with the government in 2016.

"Freight trucking company Celadon Group Inc. has agreed to pay $42.2 million to settle fraud claims after filing false financial statements and lying to auditors in efforts to hide losses of its aging trucking fleet."

So that bankrupted Celadon, right? Well, not actually. Also according to the Wall Street Journal printed August 1, 2019:

"Trucking company Celadon Group Inc. has received $165 million in new financing that the company said will help its turnaround efforts.

An unidentified shareholder is providing part of the debt and could snag as much as a 49.9% stake as a result.

The shareholder is set to receive warrants to buy 16 million common shares that are exercisable immediately as part of the deal. Fully exercised, the warrants would account for about a third of the company’s fully diluted equity and would give the lender a roughly 49.9% stake in the company, Celadon said.

The new financing includes a $105 million in term loans and a revolving credit facility of $60 million.

The shareholder is also receiving warrants to buy 5.5 million shares that become exercisable in the case of a change of control."

Seems there's a new boss at Celadon and thus far his or her name is a secret.

Who loans money to a company they know is going to fail?

Of course Celadon does have, again according to the Wall Street Journal, $427 Million Dollars in assets. You know, cash and things that can be quickly sold off. In that same article the Journal identifies the secret buyer as Luminus Energy Partners Master Fund Ltd. which just happens to be registered in Bermuda and has thousands of sketchy references on Google involving various companies going bankrupt.

Is it legit? Probably.

Was it the right thing to do? You tell me.