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Yellow Receives $1.3 Billion Offer

Estes Express Lines has jumped ahead of the previous companies trying to buy 169 terminals from the bankrupt carrier, Yellow Corp. Estes has offered $1.3 billion. 

The last we heard about this situation was when lawyers representing Yellow Corp. told the U.S. Bankruptcy Court-District of Delaware and Yellow’s shareholders and creditors that Estes would provide a $230 million loan, which Estes has since said they will not be doing. 

In lieu of this loan, MFN Partners will work in collaboration with hedge fund Citadel Credit Master Fund to fund a combined $142.5 million while Yellow winds down operations, the corporation’s attorney, Allyson Smith told the court.

Citadel will provide a bulk of the funding with $100 million and MFN will provide the remaining $42.5 million.

Estes told Transport Topics that “as a proud member of the transportation industry, Estes felt it was important to try to bring a proposal to the Yellow bankruptcy estate and its creditors that would add some value for the benefit of all case constituents and reduce some of the uncertainty surrounding this bankruptcy process.

“We were pleased to see our earlier involvement in the case resulted in the debtor securing more reasonable debtor-in-possession financing and look forward to working with Yellow and its creditor body to advance a mutually beneficial sale process. We know the people in this space and truly want to help if we can, but much needs to play out in this case,” it added.

Miami-based Citadel purchased Apollo Global Management’s $485 million loan on August 11, becoming Yellow’s largest debt holder. According to Smith, Citadel immediately expressed interest in providing a debtor-in-possession (DIP) loan to Yellow. 

The terms of the loan were much more favorable to Yellow than what Apollo was offering. Smith told the court that the DIP fee would be 4% instead of 22%-34%, which would result in savings of between $27 million and $42 million for Yellow. Yellow filed for Chapter 11 bankruptcy protection on August 6.

Citadel and MFN have proposed loans with a 15% interest rate and a 180-day maturity, which is more favorable than Apollo’s 17% interest rate. MFN has also agreed in principle to provide an additional $70 million. 

Apollo’s offer was on the table before Yellow filed for bankruptcy protection, but the company could replace the offer if it found a more favorable one. Estes Express Lines has made a stalking horse bid, which could be replaced if a better deal is available to Yellow.

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