Yellow Corp. has chosen a $142.5 million bankruptcy financing package from Citadel and MFN Partners, according to a Thursday status update in a Delaware court. The proceeding also revealed that less-than-truckload carrier Estes Express Lines has set a floor valuation for Yellow’s 166 terminals by providing a $1.3 billion stalking horse bid.
Miami-based hedge fund Citadel will front $100 million in debtor-in-possession (DIP) financing with Boston hedge fund MFN providing the remainder. MFN has also offered a delayed draw of up to $70 million. MFN will hold lender consent rights even though it is providing a smaller percentage of the upfront funds.
MFN’s status as DIP lender provides it final say on the sale of assets. The firm acquired a 42.5% equity stake in Yellow’s stock during July. It will presumably try to maximize cash proceeds from the asset liquidation to settle all claims by creditors, leaving something on the bone for shareholders.
The firm has second-lien position to a term loan and a junior position to the remaining secured creditors.
Yellow’s bankruptcy filing estimated assets at $2.15 billion with liabilities of $2.59 billion.
The new agreement in principle is expected to save the estate between $27 million and $43 million in fees and interest savings of $300,000. It also provides a 180-day period to market and sell the assets.
Representation for Yellow told the court last week that the initial DIP financing package offered by Apollo Global Management, which was presented to the court as the only viable option at the time of Yellow’s bankruptcy filing, carried less favorable terms and that it was fielding other offers. That deal provided just 90 days to unwind the estate.
When it became apparent that Apollo’s (NYSE: APO) offer wasn’t going to be chosen, the private equity firm sold the $485 million term loan it had with Yellow to Citadel.
Estes’ minimum bid for all of Yellow’s terminals carries a 2% breakup fee. The base offer sets a value of at least $130,000 for each of Yellow’s 10,000 owned doors.
Estes acquired terminals and trucks from Central Freight Lines when that carrier shut down nearly two years ago.
“We do still intend to seek the highest or otherwise best offer for all of the debtor’s assets, including the terminals, but are pleased that with the Estes bid in hand nearly all of the pre-petition secured capital structure is covered by those contemplated proceeds,” said Yellow attorney Allyson Smith.
Yellow listed funded debt at $1.22 billion in its Chapter 11 petition, which included a $737 million balance with the U.S. Treasury from a 2020 COVID-relief loan.
An agreed order is expected to be submitted as soon as Thursday evening. A recently formed unsecured creditor’s committee, chaired by counsel from Central States Pension Funds, will also review the agreement. However, that is not expected to delay the entry of the interim order.
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MD
You are right on Mark West and dream on Craig, Teamsters won’t see that happen nor should Yellow have to pay for orphans in the fund. That should be on the Teamsters.
Joe Sunday
The word on the street is that teamster company Bolus out of PA is going for a piece of this but they went from a big LTL carrier to truckload a few years ago so doesn’t make sense. Anything is possible.
Craig
Yellow need to pay up all the pension payments from 2009 to 2023 on all the past and present employees after the sell of terminals
Freight Insider
This is a brilliant move by Estes for continued expansion. The carriers to watch are ODFL, SAIA, ESTES, and the super regional carriers. They will benefit the most and continue to grow marketshare.
Lechli
It would be nice if they’d pay out accrued PTO as promised
Had not seen a dime of it.
Mike west
Oh I didn’t speak on 6 punch $39.90 a hour, and 7 punch $53.20 a hour. Sometimes work 12 to 16 hours on these days.
Mark west
Darren ran out of money and time. It’s plan to turn that company around was a good one, he should of had it on the table with the 2018, 2019 contract. It was going to cut 3 to 5000 jobs, better then 30,000 in the street. All you who was talking about shut the doors, guess what that’s what they did….. many are like a bunch of women’s, you never can please no matter what you do. $26.60 a hour all the overtime you can work, many was making a 100,000 plus a year driving a forklift as a dock worker. Now let’s see if you can get 50,000 with the same free good health care.A bunch of brain dead dummies.
Zud
Look at Estes making the run for the property!
There has to be some golden nugget properties in there very tempting.