Covenant Transportation Group Announces Texarkana Terminal Closure And Provides Liquidity Update

CHATTANOOGA, Tenn., April 20, 2020 (GLOBE NEWSWIRE) -- Covenant Transportation Group, Inc.  (NASDAQ/GS: CVTI) (“CTG”) today announced its plans for closing its Texarkana, Arkansas terminal and an update on liquidity as of March 31, 2020.

Texarkana Facility
Chairman and Chief Executive Officer, David R. Parker, commented: “Beginning May 1, 2020, CTG plans to wind down operations at the Texarkana, Arkansas terminal, which had primarily served as the operating center for solo-driven refrigerated service. CTG is continuing to provide its high-quality solo-driven refrigerated service. The terminal closure is expected to result in a permanent workforce reduction of approximately 150 support staff teammates, who will be provided severance and healthcare insurance support. This action, while regrettable and extremely painful to many in our enterprise and especially to those directly impacted, is necessary to focus our staffing and capital towards our targeted business units and to lower overhead costs. We plan to transfer all professional truck drivers and non-driving functions to our Chattanooga, Nashville, or Greeneville, Tennessee, locations.  The enterprise has detailed plans in place with the objective of continuing to deliver outstanding service for our customers and support our professional driving force from these locations.”

Liquidity Update
Mr. Parker continued: “We have a strong balance sheet and ample liquidity. At March 31, 2020, CTG had approximately $75.3 million in liquidity (cash and cash equivalents plus available borrowings under its revolving line of credit). Other potential flexible sources of liquidity include over $30 million in net book value of unencumbered owned revenue equipment and over $105 million in net book value of accounts receivable attributable to our factoring business that are not currently included in the borrowing base of our revolving credit facility. Our revolving credit facility contains a fixed charge coverage ratio covenant that will only apply in the event that available borrowing capacity is below a certain threshold. Based on availability as of March 31, 2020, there was no fixed charge coverage requirement and we do not expect to be required to test our fixed charge covenant in the foreseeable future.”