Yellow Corp., the trucking company that filed for bankruptcy on Aug. 6, is in talks with potential financiers who are offering cheaper alternatives to the loan from Apollo Global Management and other lenders.
Estes Express Lines Offers $230 Million Loan
One of the rival bidders is Estes Express Lines, a competitor of Yellow in the less-than-truckload (LTL) trucking industry. Estes has offered to provide up to $230 million in bankruptcy financing to Yellow, with payment priority behind Apollo and other existing lenders1. This means that Estes would only get repaid after Apollo and other senior creditors are fully paid off.
Estes and Yellow have exchanged a term sheet for the proposed loan and are working to finalize the deal by next week1. Estes is interested in acquiring some of Yellow’s assets, such as its terminals, trailers, and trucks, which have been valued at roughly $2.1 billion2.
MFN Partners LP Also Bids for Bankruptcy Loan
Another bidder is MFN Partners LP, a hedge fund that is Yellow’s largest shareholder. MFN has also offered to fund Yellow’s bankruptcy on better terms than Apollo’s loan3. MFN has amended its offer so that its payment priority would also fall behind that of Apollo and other existing lenders1.
MFN is seeking to protect its equity stake in Yellow, which it acquired through a debt-for-equity swap in 20204. MFN owns about 40% of Yellow’s common stock and has two seats on its board of directors4.
Apollo’s Loan Faces Opposition from Yellow
Apollo and other lenders in its group have offered a short-term loan that would refinance more than $500 million of Yellow’s existing debt immediately and place restrictions on its liquidation process3. Yellow has resisted this offer, calling it “expensive” and “onerous”3.
Yellow has the option of replacing Apollo’s loan with a better offer if it can find one before Aug. 15, when its next bankruptcy hearing is scheduled1. Yellow’s lawyer Patrick Nash said that the company is considering the alternative financing proposals from Estes and MFN and hopes to reach an agreement by next week1.
Yellow Plans to Liquidate After Dismissing Workers
Yellow filed for Chapter 11 bankruptcy protection on Aug. 6 after dismissing almost all of its 33,000 workers. The company said it plans to liquidate after facing long-running financial troubles and a dispute with union leaders over a revitalization effort.
Yellow owes more than $1 billion in secured debt, including more than $700 million to the US Treasury for a rescue loan it received during the COVID-19 pandemic2. The company expects to repay all its senior debt with the proceeds from the sale of its assets2.