Celadon in truck leasing joint venture

Freight transportation specialist the Celadon Group, which operates across the US, Canada and Mexico, has entered into a joint venture agreement with Element Transportation, a subsidiary of Element Fleet Management, to create a new leasing business.

The joint venture combines the former equipment leasing portfolios of Celadon, Element, and other lending managed by Celadon. The new operation holds over 10,000 tractors for use in leasing operations, with a business plan focused on leasing to trucking fleets.

Celadon’s contribution includes cash and lease equipment totaling $100 million in value in exchange for its equity in the joint venture. In addition, Celadon received approximately $50 million in cash proceeds from the sale of equipment at net book value for use by the new operation. This substantially reduced the company’s equipment held for sale, leased assets held for sale, and leased assets.

Celadon chairman and chief executive officer Paul Will commented: “Since August, we have been working diligently with the Element team to structure a high quality, well-capitalized business that will provide excellent transportation assets and high quality service to our customers. With the interests and investments of Element and Celadon strongly aligned, an experienced management team, and the resources to optimize leasing assets, the joint venture has the components for success.”

Will explained that the transactions furthered Celadon’s goals of exiting the capital intensive component of the leasing business, reducing balance sheet debt, and converting its own in-house lending operation primarily to an asset light business.

Bradley Nullmeyer, chief executive officer of Element, said: “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.”