INDIANAPOLIS, IN – Celadon Group, which offers extensive trucking operations across North America, has entered a new joint venture with Element Transportation that oversees more than 10,000 tractors for leasing operations.
The move combines the leasing portfolios of Celadon, Element, and 19th Capital that were managed by Celadon’s Quality Companies. Celadon and Element each hold 49.99% of the joint venture. Quality Companies, meanwhile, will provide leasing management services in exchange for a monthly fee per tractor.
Celadon contributes $100 million in cash and lease equipment in exchange for equity in the joint venture. That includes proceeds and the deferred purchase price on assets sold to 19th Capital in the 2016 fiscal year.
In addition to closing the joint venture, Celadon receives about $50 million for equipment associated with the Quality business, “substantially” reducing the equipment held for sale or leasing.
Teams have been working on the joint venture since August, and it helps Celadon leave the “capital-intensive component” of the leasing business, reduce balance sheet debt, and convert its Quality Companies unit into what is described as “an asset-light” business, said Paul Will, Celadon’s chairman and Chief Executive Officer.
“This joint venture expands Element’s position in the Class 8 tractor sector and provides a great opportunity to broaden our range of fleet services across a larger market, with a great partner,” said Bradley Nullmeyer, Element’s Chief Executive Officer.
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