Nevada
|
000-24960
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88-0320154
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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400 Birmingham Hwy., Chattanooga, TN
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37419
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(Address of principal executive offices)
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(Zip Code)
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[ ]
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01
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Entry into a Material Definitive Agreement
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On January 29, 2013, Covenant Transportation Group, Inc., a Nevada corporation (the “Company”), and its direct and indirect wholly-owned subsidiaries, Covenant Transport, Inc., a Tennessee corporation (“CTI”), CTG Leasing Company, a Nevada corporation (“CTGL”), Southern Refrigerated Transport, Inc., an Arkansas corporation (“SRT”), Covenant Asset Management, Inc., a Nevada corporation (“CAM”), Covenant Transport Solutions, Inc., a Nevada corporation (“CTS”), and Star Transportation, Inc., a Tennessee corporation (collectively with CTI, CTGL, SRT, CAM, and CTS, the “Borrowers”), entered into an Eighth Amendment to Third Amended and Restated Credit Agreement (the “Eighth Amendment”) with Bank of America, N.A., as agent (the “Agent”), and JPMorgan Chase Bank, N.A. (together with the Agent, the “Lenders”), which amends that certain Third Amended and Restated Credit Agreement, dated September 23, 2008, by and among the Company, the Borrowers, the Agent, and the Lenders, as amended (the “Credit Agreement”).
The Eighth Amendment, among other things, (i) increased the revolver commitment to $95.0 million (previously the revolver commitment was $85.0 million), (ii) extended the maturity date from September 2014 to September 2017, (iii) eliminated the availability block of $15.0 million, (iv) improved pricing for revolving borrowings by amending the “Applicable Margin” as set forth in the tables below, (v) improved the unused line fee pricing to .375% per annum when availability is less than $50.0 million and .5% per annum when availability is at or over such amount (previously the fee was .5% per annum when availability was less than $50.0 million and .75% per annum when availability was at or over such amount), (vi) provided that the fixed charge coverage ratio covenant will be tested only during periods that commence when availability is less than or equal to the greater of 12.5% of the revolver commitment or $11.875 million, (vii) eliminated the consolidated leverage ratio covenant, (viii) reduced the level of availability below which cash dominion applies to the greater of 15% of the revolver commitment or $14.25 million (previously this level was $75.0 million), (ix) added deemed amortization of real estate and eligible revenue equipment included in the borrowing base to the calculation of fixed charge coverage ratio, (x) amended certain types of permitted debt to afford additional flexibility, and (xi) allowed for stock repurchases in an aggregate amount not exceeding $5.0 million and the purchase of up to the remaining 51% equity interest in Transport Enterprise Leasing, provided that certain conditions are met. Following the effectiveness of the Eighth Amendment, the Applicable Margin was changed as follows:
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Level
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Average Pricing Availability
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Base Rate Loans
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LIBOR Loans
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L/C Fee
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I
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> $75,000,000
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.50%
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1.50%
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1.50%
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II
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≤ $75,000,000
but > $50,000,000
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.75%
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1.75%
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1.75%
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III
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≤ $50,000,000
but > $25,000,000
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1.00%
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2.00%
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2.00%
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IV
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≤ $25,000,000
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1.25%
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2.25%
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2.25%
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Level
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Average Excess
Availability
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Base Rate
Loans
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LIBOR
Loans
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I
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>$70,000,000
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1.25%
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2.25%
|
II
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≤$70,000,000 but >
$35,000,000
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1.50%
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2.50%
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III
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≤$35,000,000 but >
$20,000,000
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1.75%
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2.75%
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IV
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≤$20,000,000 but <
$10,000,000
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2.00%
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3.00%
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V
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≤$10,000,000
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2.25%
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3.25%
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In exchange for these amendments, the Borrowers agreed to pay fees of $332,500.
The foregoing summary of the terms and conditions of the Eighth Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Eighth Amendment, which is attached as Exhibit 10.1.
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COVENANT TRANSPORTATION GROUP, INC.
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||
Date: January 30, 2013
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By:
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/s/ Richard B. Cribbs
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Richard B. Cribbs
Senior Vice President and Chief Financial Officer
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EXHIBIT
NUMBER
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EXHIBIT DESCRIPTION
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Eighth Amendment to Third Amended and Restated Credit Agreement, dated effective as of December 31, 2012, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., and Bank of America, N.A. as agent
|
|
Covenant Transportation Group, Inc. press release announcing financial and operating results for the quarter and year ended December 31, 2012
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Level
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Average Pricing Availability
|
Base Rate Loans
|
LIBOR Loans
|
L/C Fee
|
I
|
> $75,000,000
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.50%
|
1.50%
|
1.50%
|
II
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≤ $75,000,000
but > $50,000,000
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.75%
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1.75%
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1.75%
|
III
|
≤ $50,000,000
but > $25,000,000
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1.00%
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2.00%
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2.00%
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IV
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≤ $25,000,000
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1.25%
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2.25%
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2.25%
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BORROWERS
:
|
||
COVENANT TRANSPORT, INC.
|
||
By:
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/s/ Richard B. Cribbs
|
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Name:
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Richard B. Cribbs
|
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Title:
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Senior Vice President and Chief Financial Officer
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CTG LEASING COMPANY
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||
SOUTHERN REFRIGERATED TRANSPORT, INC.
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||
STAR TRANSPORTATION, INC.
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||
By:
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/s/ Richard B. Cribbs
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Name:
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Richard B. Cribbs
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Title:
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Treasurer
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COVENANT ASSET MANAGEMENT, INC.
|
||
By:
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/s/ Richard B. Cribbs
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Name:
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Richard B. Cribbs
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Title:
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Assistant Treasurer
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COVENANT TRANSPORT SOLUTIONS, INC.
|
||
By:
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/s/ Richard B. Cribbs
|
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Name:
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Richard B. Cribbs
|
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Title:
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Vice President and Assistant Treasurer
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|
PARENT
:
|
||
COVENANT TRANSPORTATION GROUP, INC.
|
||
By:
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/s/ Richard B. Cribbs
|
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Name:
|
Richard B. Cribbs
|
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Title:
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Senior Vice President and Chief Financial Officer
|
|
AGENT AND LENDERS
:
|
||
BANK OF AMERICA, N.A.
,
|
||
as Agent and Lender
|
||
By:
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/s/ Douglas Cowan
|
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Name:
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Douglas Cowan
|
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Title:
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Senior Vice President
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JPMORGAN CHASE BANK, N.A.
|
||
By:
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/s/ Kennedy A. Capin
|
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Name:
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Kennedy A. Capin
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Title:
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Officer
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Lender
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Revolver Commitment
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Percentage
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Bank of America, N.A.
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$61,471,000.00
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64.70632%
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JPMorgan Chase Bank, N.A.
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$33,529,000.00
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35.29368%
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Total
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$95,000,000.00
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100.00000%
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·
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Total revenue of $177.5 million, an increase of 9.6% compared with the fourth quarter of 2011;
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·
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Freight revenue of $140.0 million (excludes revenue from fuel surcharges), an increase of 9.8% compared with the fourth quarter of 2011;
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·
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Operating income of $5.1 million and an operating ratio of 96.3%, compared with operating income of $1.2 million and an operating ratio of 99.1% in the fourth quarter of 2011; and
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·
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Net income of $1.5 million, or $0.10 per share, compared with net loss of $2.2 million, or ($0.15) per share in the fourth quarter of 2011.
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·
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Maturity extended three years to September 2017
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·
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Commitment increased $10.0 million to $95.0 million
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·
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Fixed charge coverage tested only if excess revolver availability is less than $11.9 million
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·
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Leverage ratio coverage eliminated
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·
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Minimum availability requirement of $15.0 million eliminated
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·
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Pricing grid reduced with effectiveness at December 31, 2012
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Covenant Transportation Group, Inc.
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||||||||||||||||||||||||
Key Financial and Operating Statistics
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||||||||||||||||||||||||
INCOME STATEMENT DATA
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INCOME STATEMENT DATA
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|||||||||||||||||||||||
Three Months Ended Dec 31,
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Year Ended Ended Dec 31,
|
|||||||||||||||||||||||
($000s, except per share data)
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2012
|
2011
|
% Change
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2012
|
2011
|
% Change
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||||||||||||||||||
Freight revenue
|
$ | 139,999 | $ | 127,496 | 9.8 | % | $ | 529,080 | $ | 512,026 | 3.3 | % | ||||||||||||
Fuel surcharge revenue
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37,496 | 34,457 | 145,174 | 140,601 | ||||||||||||||||||||
Total revenue
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$ | 177,495 | $ | 161,953 | 9.6 | % | $ | 674,254 | $ | 652,627 | 3.3 | % | ||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
Salaries, wages, and related expenses
|
58,035 | 52,496 | 217,080 | 211,169 | ||||||||||||||||||||
Fuel expense
|
49,667 | 49,396 | 194,841 | 208,693 | ||||||||||||||||||||
Operations and maintenance
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11,574 | 11,074 | 45,265 | 43,585 | ||||||||||||||||||||
Revenue equipment rentals and
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||||||||||||||||||||||||
purchased transportation
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23,190 | 18,116 | 85,010 | 63,353 | ||||||||||||||||||||
Operating taxes and licenses
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2,746 | 3,013 | 11,043 | 12,148 | ||||||||||||||||||||
Insurance and claims
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9,436 | 8,480 | 33,707 | 36,163 | ||||||||||||||||||||
Communications and utilities
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1,234 | 1,242 | 4,809 | 5,137 | ||||||||||||||||||||
General supplies and expenses
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4,493 | 4,207 | 16,068 | 15,627 | ||||||||||||||||||||
Depreciation and amortization, including gains and
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||||||||||||||||||||||||
losses on disposition of property and equipment
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11,971 | 12,770 | 43,222 | 46,274 | ||||||||||||||||||||
Goodwill impairment charge
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- | - | - | 11,539 | ||||||||||||||||||||
Total operating expenses
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172,346 | 160,794 | 651,045 | 653,688 | ||||||||||||||||||||
Operating income (loss)
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5,149 | 1,159 | 23,209 | (1,061 | ) | |||||||||||||||||||
Other (income) expenses:
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||||||||||||||||||||||||
Interest expense
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2,769 | 4,085 | 12,697 | 16,208 | ||||||||||||||||||||
Interest income
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- | - | - | (32 | ) | |||||||||||||||||||
Other
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6 | (39 | ) | (13 | ) | (123 | ) | |||||||||||||||||
Other expenses, net
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2,775 | 4,046 | 12,684 | 16,053 | ||||||||||||||||||||
Equity in income of affiliate
|
650 | 200 | 1,875 | 675 | ||||||||||||||||||||
Income (loss) before income taxes
|
3,024 | (2,687 | ) | 12,400 | (16,439 | ) | ||||||||||||||||||
Income tax expense (benefit)
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1,571 | (442 | ) | 6,335 | (2,172 | ) | ||||||||||||||||||
Net income (loss)
|
$ | 1,453 | $ | (2,245 | ) | $ | 6,065 | $ | (14,267 | ) | ||||||||||||||
Basic earnings (loss) per share
|
$ | 0.10 | $ | (0.15 | ) | $ | 0.41 | $ | (0.97 | ) | ||||||||||||||
Diluted earnings (loss) per share
|
$ | 0.10 | $ | (0.15 | ) | $ | 0.41 | $ | (0.97 | ) | ||||||||||||||
Basic weighted average shares outstanding (000s)
|
14,758 | 14,720 | 14,742 | 14,689 | ||||||||||||||||||||
Diluted weighted average shares outstanding (000s)
|
14,915 | 14,720 | 14,808 | 14,689 | ||||||||||||||||||||
Three Months Ended Dec 31,
|
Year Ended Ended Dec 31,
|
|||||||||||||||||||||||
2012 | 2011 |
% Change
|
2012 | 2011 |
% Change
|
|||||||||||||||||||
($000s)
|
SEGMENT REVENUES
|
SEGMENT REVENUES
|
||||||||||||||||||||||
Asset-based trucking revenues
|
$ | 132,689 | $ | 120,804 | 9.8 | % | $ | 502,812 | $ | 484,651 | 3.7 | % | ||||||||||||
Covenant Transport Solutions non-asset based
revenues
|
7,310 | 6,692 | 9.2 | % | 26,268 | 27,375 | -4.0 | % | ||||||||||||||||
Freight revenue
|
$ | 139,999 | $ | 127,496 | 9.8 | % | $ | 529,080 | $ | 512,026 | 3.3 | % | ||||||||||||
OPERATING STATISTICS
|
OPERATING STATISTICS
|
|||||||||||||||||||||||
Average freight revenue per loaded mile
|
$ | 1.708 | $ | 1.578 | 8.3 | % | $ | 1.633 | $ | 1.527 | 6.9 | % | ||||||||||||
Average freight revenue per total mile
|
$ | 1.533 | $ | 1.421 | 7.9 | % | $ | 1.471 | $ | 1.382 | 6.4 | % | ||||||||||||
Average freight revenue per tractor per week
|
$ | 3,509 | $ | 3,079 | 14.0 | % | $ | 3,322 | $ | 3,069 | 8.2 | % | ||||||||||||
Average miles per tractor per period
|
30,082 | 28,482 | 5.6 | % | 118,103 | 115,775 | 2.0 | % | ||||||||||||||||
Weighted avg. tractors for period
|
2,877 | 2,986 | -3.6 | % | 2,895 | 3,029 | -4.4 | % | ||||||||||||||||
Tractors at end of period
|
2,884 | 2,978 | -3.2 | % | 2,884 | 2,978 | -3.2 | % | ||||||||||||||||
Trailers at end of period
|
6,904 | 7,361 | -6.2 | % | 6,904 | 7,361 | -6.2 | % | ||||||||||||||||
SELECTED BALANCE SHEET DATA
|
||||||||||||||||||||||||
($000s, except per share data)
|
12/31/2012
|
12/31/2011
|
||||||||||||||||||||||
Total assets
|
$ | 400,232 | $ | 439,825 | ||||||||||||||||||||
Total equity
|
$ | 94,673 | $ | 87,055 | ||||||||||||||||||||
Total balance sheet debt, net of cash
|
$ | 168,098 | $ | 238,616 | ||||||||||||||||||||
Net Debt to Capitalization Ratio
|
64.0 | % | 73.3 | % | ||||||||||||||||||||
Tangible book value per basic share
|
$ | 6.38 | $ | 5.85 |