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Estes sets floor to buy Yellow terminals at $1.3B

Citadel, MFN Partners to provide $142.5M in bankruptcy financing

Estes Express Lines is now on the hook for Yellow's terminals. (Photo: Jim Allen/FreightWaves)

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.

More FreightWaves articles by Todd Maiden

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  1. Kenneth Howard

    I’ve noticed over the last few years that Estes express seems to have a lot of cash flow, stepping in sucking up a lot of equipment and real estate, a few years ago they bought most of Roadways and A lot of yellows terminals and a lot of there equipment, in addition they too took on Central freight lines, bought most of there stuff. Hopefully they haven’t bit off more than they can chew.

  2. Steve

    Well, the teamster leaders in Washington collect full pay. What are the Yellow employees getting paid? The Teamsters are trying to use their power to organize AMAZON. Good luck you guys put 30,000 people on the street with no pay and in a short time no benefits. Great job O’Brien. I spent 48 years in the trucking industry. Wait till these guys who didn’t want to be road drivers/Dockman find out that’s the job at nonunion carriers. Think the non-union carriers who are stupid enough to hire you guys will put up with the bull. Maybe some of you will get jobs at the non-union carriers at a better rate per hour but wait till you have to pay every week for the benefits that the union companies paid for. Oh yea 401k’s with the non-union guys not a company paid retirement program. But O’Brien and his buddies will continue to get it all. Some of them get up to 2 or 3 pensions from the Teamsters.

  3. Mike

    I have been a Estes employee for 19 plus years. At least they will be around for years too come.With all the right people in the right place. Thanks you Brain for all you do.

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.