Yellow Reportedly Working on Loan From Apollo

Investing Giant Lent Trucking Company $600 Million in 2019
Yellow trucks at a YRC facility in Richfield, Ohio
Yellow trucks at a YRC facility in Richfield, Ohio, on July 29. (Sue Ogrocki/Associated Press)

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Creditors led by Apollo Global Management Inc. are nearing a deal to provide Yellow Corp. with fresh cash during a coming bankruptcy, according to people with knowledge of the matter.

The investing giant is finalizing a deal to lead a debtor-in-possession, or DIP, financing for the imperiled trucking company, said the people, who asked not to be identified because the matter is private. Apollo is well-positioned to provide the financing because it owns most of one of Yellow’s term loans, the people said. Talks aren’t final and plans may change, they added.

Representatives for Apollo and Yellow declined to comment.

The less-than-truckload carrier has been teetering in recent weeks and told its employees July 30 it was shutting down. The company has more than $1 billion of debt maturing next year that it has struggled to refinance.

Apollo is no stranger to Yellow: The investment firm was the lead lender on the company’s $600 million term loan in 2019, when it was known as YRC Worldwide Inc.

Yellow's recent cash balances

Yellow’s brush with bankruptcy is only the latest in a long history of corporate struggles. The Nashville, Tenn.-based shipper traces its roots to a 1920s Oklahoma City cab company. The name, emblazoned upon trucks across America’s roadways, is a callback to the firm’s origins.

Some 80 years later, Yellow in 2003 bought trucking peer Roadway Corp. for over $1 billion — a deal that would pave the way for a new identity as YRC Worldwide, along with the seeds of a debt burden that would eventually prove too much to handle. It grew further in 2005 with its purchase of USF Corp. for $1.37 billion.

Yellow found itself flirting with bankruptcy in 2009 after posting nearly $2 billion in losses over the course of five quarters. Executives at the time worked to convince bondholders to swap their debt for equity in the trucking firm, a bid to avoid liquidation.

The effort was successful despite suggestions from the company’s then-chief executive of nefarious actors in the credit default-swap market. Yellow, once the biggest U.S. trucker, had to restructure once again just two years later by issuing a huge slug of new shares.

Yellow sign outside its Nashville, Tenn., headquarters

A Yellow sign outside its Nashville, Tenn., facility on July 31. (George Walker IV/Associated Press)

Much of Yellow’s debt predicament stems from a now-controversial rescue loan it took on during the COVID-19 pandemic. The U.S. government lent the company some $700 million in 2020, making up 95% of what was dispersed under a CARES Act program to offset losses for businesses critical to national security.

That deal has since come under scrutiny. Congressional investigators concluded last year that top aides to former President Donald Trump pressured U.S. Treasury and Defense Department officials to approve the loan even though the company may not have been eligible for it.

Yellow owes about half its total debt load to the U.S. Treasury, according to company filings. That means the U.S. government will likely be Yellow’s biggest creditor, should the company file for bankruptcy. The loan has claims to the company’s assets and is near the front of the repayment line.

Yellow Corp. ranks No. 13 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 3 on the LTL list. It has about 30,000 employees. Shippers of that kind rarely avoid liquidating when they file for bankruptcy, Bloomberg Intelligence’s Lee Klaskow said in a July 27 note.

By Reshmi Basu, Rachel Butt and Jeremy Hill.

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