Covenant Logistics Group Completes Asset Sale of Transport Financial Solutions Factoring Segment
09 July 2020 - 7:40AM
Covenant Logistics Group, Inc. (NASDAQ/GS: CVLG) (“Covenant”) today
announced the sale of the transportation factoring assets of its
Transport Financial Solutions (“TFS”) segment to Triumph Business
Capital for approximately $132.2 million, including contingent
consideration of approximately $9.9 million. Triumph Business
Capital is an indirect wholly owned subsidiary of Triumph Bancorp,
Inc. (NASDAQ: TBK) (“Triumph”).
Chairman and Chief Executive Officer, David R.
Parker, commented: “TFS has grown significantly since inception in
late 2011 and delivered consistently strong margins and returns.
With a critical mass of over $100.0 million of capital deployed and
strong growth opportunities, it was time to transition the business
to an owner with a core lending focus and deep knowledge of the
transportation industry. We are confident Triumph is the right
partner for TFS’ clients going forward. The ability to pay down
over $120.0 million of debt in the near term is consistent with our
goals of significantly reducing our leverage and concentrating our
business model on services and sectors where we can add
considerable value to our partner-customers in the U.S. logistics
industry.”
The transaction was structured as a sale of TFS’
factoring assets, consisting primarily of $103.3 million of net
accounts receivable and related transportation factoring assets. In
exchange, Covenant received cash proceeds, net of transaction
expenses, totaling approximately $107.5 million, plus Triumph
common stock valued at approximately $13.9 million, and the
opportunity to earn contingent cash consideration (net of
allocations to former TFS management) of up to approximately $9.0
million after the twelve-month period ending July 31, 2021. The
parties also entered into an ongoing referral arrangement.
The TFS transaction is expected to generate a
third quarter pretax gain ranging from $34.0 to $38.0 million. The
third quarter gain from the sale of TFS is expected to modestly
exceed the net amount of multiple second quarter gains,
impairments, and expenses relating primarily to the sale or exit of
certain real estate, downsizing unprofitable operations,
reallocating fleet assets toward contract logistics operations, and
other actions consistent with the strategic plan. Additional
information will be provided in connection with the release of
earnings for the second quarter of 2020.
About CovenantCovenant Logistics Group, Inc.,
through its subsidiaries, offers a portfolio of transportation and
logistics services to customers throughout the United States.
Primary services include asset-based expedited, dedicated, and
irregular route truckload capacity, as well as asset-light
warehousing, transportation management, and freight brokerage
capability. In addition, Transport Enterprise Leasing is an
affiliated company providing revenue equipment sales and leasing
services to the trucking industry. Covenant's Class A common stock
is traded on the NASDAQ Global Select market under the symbol,
“CVLG.”
About Triumph Bancorp,
Inc.Triumph Bancorp, Inc. (NASDAQ: TBK) is a financial
holding company headquartered in Dallas, Texas, with a diversified
line of community banking, national lending, and commercial finance
products. Its bank subsidiary, TBK Bank, SSB, is a Texas-state
savings bank offering commercial and consumer banking products
focused on meeting client needs in Texas, Colorado, Kansas, New
Mexico, Iowa and Illinois. It serves a national client base with
factoring, equipment lending and asset-based lending through
Triumph Commercial Finance, discount factoring through Advance
Business Capital LLC, d/b/a Triumph Business Capital, insurance
through Triumph Insurance Group, Inc., and carrier and vendor
payment solutions through TriumphPay.
About Triumph Business
CapitalTriumph Business Capital is an operating subsidiary
of TBK Bank, SSB (Member FDIC), offering invoice factoring and
payment processing solutions to transportation and other service
industries.
This press release contains certain statements
that may be considered forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
and such statements are subject to the safe harbor created by those
sections and the Private Securities Litigation Reform Act of 1995,
as amended. Such statements may be identified by their use of terms
or phrases such as "expects," "estimates," "projects," "believes,"
"anticipates," "plans," "intends," “outlook,” “focus,” “seek,”
“potential,” “continue,” “goal,” “target,” “objective,” derivations
thereof, and similar terms and phrases. Forward-looking statements
are based upon the current beliefs and expectations of our
management and are inherently subject to risks and uncertainties,
some of which cannot be predicted or quantified, which could cause
future events and actual results to differ materially from those
set forth in, contemplated by, or underlying the forward-looking
statements. In this press release, the statements relating to
expectations for the amount of debt to be repaid with proceeds of
the transaction, significant reduction of leverage, concentration
of the business model on certain services and sectors, and the
anticipated amounts, nature, and timing of gains, losses, and other
accruals, are forward-looking statements. The following factors,
among others could cause actual results to differ materially from
those in the forward-looking statements: the completion of required
accounting estimates, entries, and procedures; the ability to
monetize the Triumph common stock received in the transaction and
the timing and amount of net proceeds therefrom; the application of
net proceeds of the foregoing; the level of future net capital
expenditures and other cash needs of the business and associated
borrowing to fund the same; the timing and success of implementing
the strategic plan. Readers should review and consider these
factors along with the various disclosures by the Company in its
press releases, stockholder reports, and filings with the
Securities and Exchange Commission. We disclaim any obligation to
update or revise any forward-looking statements to reflect actual
results or changes in the factors affecting the forward-looking
information.
For further information contact:Richard B.
Cribbs, Senior Vice PresidentRCribbs@covenanttransport.com
Covenant Transportation (NASDAQ:CVTI)
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