An attorney representing now-defunct Yellow Corp. said there has been new interest from parties willing to provide the company with bankruptcy financing.
At a Friday hearing in a Delaware court, Yellow (NASDAQ: YELL) attorney Pat Nash said there had been “a number of inbounds from other parties” willing to provide the debtor-in-possession (DIP) financing needed to fund the marketing and sale of the company’s assets. One of those parties has retained counsel.
It was made known at a Wednesday proceeding that less-than-truckload carrier Estes Express Lines and Boston hedge fund MFN Partners, which amassed a more than 40% stake in Yellow’s equity during July, were making offers to provide DIP financing. The offers were said to provide better financial terms as well as more time to liquidate the company’s terminals and equipment than the deal provided by Yellow’s term loan lender, Apollo Global Management (NYSE: APO), at the time of the bankruptcy filing.
Nash said Estes and MFN Partners indicated a “willingness to provide new money on a junior basis,” which is a concern of Apollo’s. Apollo holds first-lien position on a term loan with a $501 million balance. It also has a lien position ahead of the government on the first tranche of a COVID relief loan issued by the Treasury.
Debtor-in-possession financing allows the lenders of new money to take senior lien positions ahead of the existing lenders at the time of the bankruptcy filing.
Nash also said Friday that Estes has provided a term sheet for its proposal.
“As I stand here today, I have optimism that we are going to have one of these parties posting, maybe we’ll have both of these parties posting … willing to put in money on a junior basis on terms and conditions that work for the pre-petition secured parties as well as for the debtors,” Nash said.
He’s hopeful to have a new financing agreement early next week that has “much more favorable” terms than what Apollo offered.
There still appears to be some discrepancy over the term “junior.” Nash said some existing lenders have provided comments on their interpretation, which he has shared with the potential DIP lenders.
During the Friday hearing, one of Apollo’s lawyers reiterated that assets should be sold in a manner that maximizes cash proceeds to the estate and not by means of credit bids, which allow senior-lien holders to use debt owed to them to make offers.
An attorney for MFN said no one should get preferential treatment in the marketing process.
“We want to make sure that whomever is the DIP lender, if it’s MFN or somebody else, that it allows for the estate to have a robust marketing process and doesn’t give a leg up to anyone that’s interested in bidding,” said Eric Winston, an attorney representing MFN Partners.
Yellow filed for Chapter 11 bankruptcy on Sunday with the plan of liquidating assets to pay off lenders. The filing listed $2.15 billion in assets and $2.59 billion in debt. It owns approximately 10,000 doors at 169 terminals, which some are hoping could fetch as much as $200,000 per door.
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