Calco/Hotard Group, All Aboard America! sign letters of intent

LOS ANGELES A California-based private equity firm plans to buy three of the motorcoach industrys best-known operators Calco Travel, Hotard Coaches and All Aboard America!

The deal surfaced publicly last month when the U.S. Surface Transportation Board, a unit of the U.S. Department of Transportation, tentatively approved and authorized the transaction.

Calco, Hotard Coaches and All Aboard America! have signed letters of intent but the principals declined to discuss the deal until it has been wrapped up.

The buyer is Celerity Partners of Los Angeles, which manages roughly $200 million in equity capital across four funds. Since 1995, it has specialized in supplying growth equity, corporate divestitures, recapitalizations, de-leveraging investments, and management buyouts.

Celeritys current investment portfolio includes companies in three sectors: IT products, manufacturing services, and health/life science products and services. It has investments in such companies as Rincon Industries, Streamline Circuits, PC Helps Support, Synteract, Pinnacle Treatment Centers and Analytical Bio-Chemistry Laboratories.

It has tended to specialize in industrials, capital goods, aerospace and defense, commercial and professional services, consumer durables and apparel, media, and healthcare industries. The motorcoach/bus industry seemingly is a new direction.

Celerity is buying Calco Travel of Geismar, La., from Callen Hotard, and Hotard Coaches of New Orleans from Callen Hotard and his wife, Coleen. Callen Hotard is president of both companies, with the two operations often identified simply as Calco/Hotard Group.

All Aboard America!, which has a legal name of Industrial Bus Lines, is headquartered in Mesa, Ariz., and is controlled through stock ownership by Jack D. Wigley and Wigley family trusts. Jack Wigley heads the company.

Both Calco/Hotard and All Aboard America! are members of International Motor Coach Group, with Wigley having served as IMG chairman in 2006-07 and honored as IMG Operator of the Year in 2006.

Wigley also is a former winner (in 2005) of the BusRide Magazine Industry Achievement Award, and the UMA Vision Award (for large operators) at the 2011 UMA Motorcoach Expo in Tampa, Fla.

Hotard won the UMA Vision Award (for large operators) at UMA Motorcoach Expo 2007 in New Orleans; he was the first president of the South Central Motorcoach Association in 2006, and currently hes a director of UMA.

Both Wigley and Hotard were early supporters of the Motorcoach Marketing Council and served on its board.

In its January listing of North Americas 50-largest motorcoach operators, Metro magazine had the Calco/Hotard Group and All Aboard America! in a three-way at No. 18, with Charter Bus Lines of British Columbia. All three were listed then as operating 89 buses and coaches.

A $40 million operation

If the deal is completed, the combined Calco/Hotard Group and All Aboard America! will be the 12th largest motorcoach operation in North America with combined revenue of more than $40 million.

According to the Surface Transportation Board filing, Calco and Hotard Coaches currently operate 89 vehicles in Louisiana and Mississippi, and are operationally integrated to a significant degree.

Charter and sightseeing services account for roughly 67 percent of the combined Calco-Hotard revenues, with contracted transit and shuttle services accounting for the remaining 33 percent.

All Aboard America! was listed by the Surface Transportation Board as having 84 vehicles in Arizona, New Mexico and Texas. Thirty-eight percent of its revenues were reported to derive from charter and sightseeing services, and 51 percent from contracted transit and shuttle work. The remaining 11 percent comes from scheduled regular-route operations and related package-express service, plus vehicle maintenance and repair services for third parties.

Under the proposed transaction, Celerity Partners and its entities will acquire 100 percent control of Calco/Hotard and All Aboard America! The deal, as presented to the Surface Transportation Board, would be completed through a series of stock purchase agreements, with Callen Hotard and Jack Wigley becoming minority shareholders.

The Surface Transportation Board documents did not indicate how future management of the companies would be structured.

Celerity, Calco/Hotard and All Aboard America! did say the companies "do not intend to change substantially the physical operations historically conducted by the three carriers.

Saving, sharing, security

"Rather, applicants anticipate enhancing operations of the three carriers by implementing vehicle sharing arrangements, by providing coordinated driver training and safety management services, and by centralizing various management support functions."

They also said they expected to be able to access financing on more favorable terms, including better interest rates, as well as modestly enhancing their volume purchasing power, reducing insurance premiums and achieving deeper volume discounts for equipment and fuel.

Additionally, they noted that the deal would directly benefit employees by maintaining job security and retaining or expanding the volume of available work.

If the Surface Transportation Board receives no public comments opposed to the deal, its preliminary approval will become final.

Anyone wishing to file comments on the proposed purchase must do so by June 25. Comments opposing the application must follow the rules under federal law at 49 C.F.R. §§ 1182.5 and 1182.8.

An original and 10 copies of any comments, referring to Docket No. MCF 21044, should be sent to: Surface Transportation Board, 395 E Street, S.W., Washington, DC 204230001. In addition, one copy of comments should be sent to the applicants representative: Mark J. Andrews, Strasburger & Price LLP, Suite 640, 1700 K Street, N.W., Washington, DC 20006.

Questions of the Surface Transportation Board can be directed to Amy C. Ziehm, (202) 245-0391.