Estes Express Offers $1.525 Billion for Yellow Terminals

Stalking Horse Bid Trumps Rival Old Dominion Freight Line Offer
Estes Express truck
Estes Express Lines has offered $1.525 billion, the third stalking horse bid for the most valuable part of Yellow’s assets. (John Sommers II for Transport Topics)

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Estes Express Lines upped the ante in the fight for 169 terminals owned by bankrupt Yellow Corp. ahead of a key Sept. 15 hearing, filing a revised stalking horse bid, court documents show.

Estes Express offered $1.525 billion, the third stalking horse bid for the most valuable part of less-than-truckload carrier Yellow’s assets.

Old Dominion Freight Line on Aug. 18 offered $1.5 billion to acquire the terminals, scuppering an initial $1.3 billion Estes Express bid on Aug. 17 that analysts told Transport Topics substantially undervalued the assets.

Yellow ranks No. 13 on the Transport Topics Top 100 list of the largest for-hire carriers in North America prior to filing for court protection. Estes Express ranks No. 14, and ODFL ranks No. 10.

What Is a Stalking Horse Bid?

A stalking horse bid is an initial offer on the assets of a bankrupt company that sets a low-end bidding bar so that others cannot make cheaper bids.

“The Estes stalking horse bid is an improvement over the Old Dominion bid because it offers more money for the acquired assets and less fees in terms of bid protections,” Yellow said in a Sept. 13 filing.

Estes Express trimmed the size of its breakup fee after what Yellow’s lawyers termed “hard-fought negotiations” with both the Richmond, Va.-based company and Thomasville, N.C.-based ODFL.


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The bid protections add up to a maximum of $9.1 million, comprising a $7.5 million breakup fee and expense reimbursement of up to $1.6 million.

For comparison, when Estes submitted its first stalking horse bid, the breakup fee alone totaled $26 million, or 2% of the transaction fee.

Beyond Estes Express and ODFL, Yellow’s lawyers said around 540 prospective purchasers had contacted the company so far asking about its rolling stock and property assets. Some 307 of those interested parties had executed confidentiality agreements and gained access to Yellow’s Data Room, they added.

Yellow owned about 12,700 tractors and 42,000 trailers at the end of the second quarter, according to company documents.

The assets will be auctioned off Oct. 18.

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Before then, the latest hearing in the U.S. Bankruptcy Court-District of Delaware courtroom of U.S. Bankruptcy Judge Craig Goldblatt takes place Sept. 15.

Among the key matters for approval before Goldblatt will be the minutiae of the auction process plus final approval of $142.5 million in loans from MFN Partners and fellow hedge fund Citadel Credit Master Fund known as debtor-in-possession financing.

MFN Partners is Yellow’s largest shareholder. Miami-based Citadel bought out Apollo Global Management’s $485 million loan to Yellow on Aug. 11.