Yellow Corp. has drawn additional interest from potential financiers who are offering alternative bankruptcy financing for the short-haul trucking company that’s more affordable than a loan from lenders led by Apollo Global Management.
Yellow lawyer Patrick J. Nash said Friday during a court hearing that funders are offering to provide a Chapter 11 loan to the company with payment priority behind Apollo and other lenders. Such a concession is rarely offered in Chapter 11 financing, which usually sits ahead of all other debt because lending to bankrupt companies is risky.
Nashville-based Yellow filed for court protection on Sunday 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. Competition to provide funding for the liquidation shows lenders are confident the company will repay all its outstanding senior debt, including a $700 million Covid-19 era loan from the US government.
Yellow is evaluating financing options announced earlier this week from hedge fund MFN Partners LP, Yellow’s largest shareholder, and rival trucking company Estes Express Lines. Nash said MFN has amended its offer so that its payment priority would fall behind that of Apollo. Estes and Yellow have exchanged a term sheet for Estes offer to extend as much as $230 million to fund Yellow’s liquidation, he said.
Nash said Yellow expects to finalize a Chapter 11 loan by next week. Its next appearance in bankruptcy court is scheduled for Aug. 15
“Everything you’ve described sounds like good news and the way things ought to work,” Judge Craig T. Goldblatt said Friday.
Dennis Dunne, a lawyer representing funds managed by Apollo, said the firm has been working with Yellow on possible issues with the proposed financing and hopes to resolve them by next week. Although Apollo is supportive of new Chapter 11 financing that’s junior to existing debt, Dunne said financiers’ should only be permitted to bid on Yellow’s assets if it means existing debt is paid-off first. Credit bidding allows lenders to use debt they’re owed to acquire a bankrupt company’s assets.
“We’re working through these issues and hopefully, you know, we can resolve them before next Tuesday,” Dunne said.
Yellow’s assets have been valued at roughly $2.1 billion and include a substantial real estate portfolio with about 300 service centers, 42,000 trailers and 12,700 tractors. Nash said earlier this week that the company’s service centers are located throughout the country, many in fully-developed urban areas, where such terminals are no-longer being built.
The case is Yellow Corp. 23-11069, US Bankruptcy Court District of Delaware (Wilmington).