Yellow Looks to Finalize Bankruptcy Loan

Estes Express Lines Offers $230 Million to Fund Liquidation
Yellow trucks at a California terminal
Yellow Corp. trucks parked at a facility in Hayward, Calif., Aug. 2. (David Paul Morris/Bloomberg News)

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Negotiations between Yellow Corp. and a growing number of parties interested in financing the Nashville, Tenn.-based company’s bankruptcy proceedings are continuing. A hearing that had been set for Aug. 15 has been postponed to Aug. 17.

Yellow’s lead bankruptcy attorney, Kirkland & Ellis partner Patrick Nash, told a Delaware court Aug. 11 that negotiations continued with less-than-truckload competitor Estes Express Lines, hedge fund MFN Partners and a number of other parties that have come forward since an Aug. 9 hearing and are willing to lend the 99-year-old company money while it is wound down.

Richmond, Va.-based Estes had provided term sheets for its offer to loan Yellow $230 million since the last hearing, said Nash. Estes Express Lines ranks No. 14 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. An Estes Express Lines spokeswoman declined to comment on any involvement in the proceedings Aug. 11.

Estes Express Lines ranks No. 5 among the largest LTL carriers. Before shutting its doors July 30, Yellow ranked just ahead of Estes as the third-largest less-than-truckload carrier. Yellow also ranked No. 13 on the for-hire TT 100.

Nash expects at least one of the entities — MFN is also Yellow’s biggest shareholder — to follow through with a firm offer to provide a loan.

“I have optimism that we’ll have one of those parties posting; maybe we’ll have both of those parties posting, which will make this even more interesting. But we think we’re going to have at least one of those parties posting, willing to put in money on a junior basis, on terms and conditions that work for the pre-petitioned secured parties as well as for the debtors,” Nash told Judge Craig Goldblatt.


If that proves to be true, “without question it is going to be much more favorable” than a financing offer from funds led by Apollo Global Management, Nash said, particularly as both Estes and MFN are offering a loan whose place in the queue for repayment would be behind that of Apollo and other lenders.

Apollo offered a deal that would extend Yellow a short-term loan to refinance more than $500 million of debt. The Apollo offer was on the table before Yellow filed for Chapter 11 bankruptcy on Aug. 6. Yellow can replace the Apollo offer if it perceives an alternative to be more favorable.

Milbank partner Dennis Dunne, representing Apollo, which is the senior secured lender, said the investment group was willing to work with parties who wanted to loan Yellow money while remaining below Apollo in the repayment pecking order.

MFN, while now offering “junior” loan terms that would put the shareholder in a similar spot in the repayment queue to Estes, is also keen to see the best terms win out, said Eric Winston, a partner with Quinn Emanuel Urquhart & Sullivan representing the fund.

“We want to make sure whomever is the [debtor-in-possession] lender … it allows for the estate to have a robust marketing process [and] doesn’t give a leg up to anyone that is interested in bidding … [whoever that is] should be the most efficient economically, but efficient to allow for that robust marketing process,” he said.

After a 1 p.m. EDT Aug. 15 hearing was agreed upon as the next stage in the process (but since postponed to Aug. 17), Goldblatt agreed to plans to keep Yellow’s shuttered assets in the best condition possible for potential buyers.

The bankruptcy judge approved dispersal of $1.5 million to cover two weeks of utility payments for Yellow’s 311 transportation centers. Of those 311, Yellow owns 169.

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