Element Financial Corporation (“Element” or the “Company”), one of North America’s leading equipment finance companies, announced today that it has entered into a multi-year Program Agreement (the “Program Agreement”) with Indianapolis-based Celadon Group, Inc. (“Celadon”), one of the largest and most progressive transportation and logistics companies in North America, under which Element will provide financing for the renewal and expansion of the transportation assets operated by independent lessees under contract to Celadon.
As part of this transaction, Element has also entered into a Portfolio Purchase and Sale Agreement (the “Portfolio Agreement”) under which Element has invested US$53 million to acquire a portfolio of equipment leases backed by transportation assets currently operated by independent lessees under contract to Celadon.
Founded in 1985, Celadon Group contracts with a network of select independent owner-operators to provide some of the world’s leading manufacturers and retailers with transportation, logistics and material handling services across North America.
The existing portfolio of financial assets acquired from Celadon and its subsidiaries is backed by leases on approximately 600 tractor units currently in service with independent owner-operators under contract with Celadon and partner carriers. Celadon will continue to provide ongoing maintenance and repair services as well as other administrative services for Element on the financed tractor units as part of these agreements. Future origination volumes under the Program Agreement are expected to average between US$20 million and US$25 million annually.
“We are extremely pleased to have this opportunity to partner with one of North America’s leading transportation and logistics companies in what we expect will be a durable and mutually beneficial alliance,” said Bradley Nullmeyer, Element Financial Corporation’s President. “This transaction provides Celadon with a more efficient means to finance the capital equipment it needs to operate and grow its business at the same time that it provides Element with access to a diversified and growing portfolio of leases that meet our asset quality and return objectives,” added Mr. Nullmeyer.
“As we began working with Element to conceive this transaction we quickly realized that we were dealing with more than just a source of funding for Celadon’s capital equipment,” said Paul Will, Celadon’s President and Chief Executive Officer. “We began to see the potential of partnering with a highly innovative team of transportation equipment finance specialists who understood how they could help us optimize the capital structure of our business model,” added Mr. Will.