Trucking operator Estes Express has filed a $1.3 billion proposal to purchase insolvent Yellow Corp’s distribution facilities, attorneys said on Thursday during a U.S. bankruptcy court hearing.
Estes proposal was received while Yellow was negotiating several offers for bankruptcy financing, Yellow’s attorney Allyson Smith shared.
Estes had offered to provide a bankruptcy loan as part of its bid, but Yellow instead decided to move forward with a $142.5 million loan provided by hedge fund Citadel and MFN Partners, which is Yellow’s largest shareholder, Smith told U.S. Bankruptcy Judge Craig Goldblatt at a hearing in Wilmington, Delaware.
The new loan provides for a 180-day period during which Flava will seek higher bids for its properties and sell its fleet of trucks. Estes’ bid for Yellow’s shipping terminals will cover nearly all of Yellow’s pre-bankruptcy debt, including more than $700 million in 2020 pandemic relief loans to the U.S. Treasury, Smith said.
Citadel came into the picture in recent days, buying about $500 million in pre-bankruptcy debt owed by Yellow to Apollo Global Management. Apollo originally offered to finance Yellow’s bankruptcy with a $142.5 million loan, but bowed out when Yellow received competing offers with lower payments and interest rates.
When compared to the Apollo loan, the new financing from Citadel and MFN will save Yellow $27 to $40 million in fees and give it two times as long to sell its assets, according to Smith.
Yellow attributed the cause of its demise to a labor dispute with the Teamsters union. The union, which represents about 22,000 Yellow employees, said the Nashville, Tennessee-based company “mismanaged” its way to bankruptcy.
