Date: Thursday, August 3rd, 2023
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, which accepts shipments that don’t fill a whole trailer, has been teetering in recent weeks and told workers Monday it was shutting down, according to the labor union that represents Yellow’s drivers. 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 brush with bankruptcy is only the latest in a long history of corporate struggles. The Nashville-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 US trucker, had to restructure once again just two years later by issuing a huge slug of new shares
Much of Yellow’s current debt predicament stems from a now-controversial rescue loan it took on during the Covid-19 pandemic. The US 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 US Treasury and Defense Department officials to approve the loan even though the company was ineligible for it.
Yellow owes about half its total debt load to the US Treasury, according to company filings. That means the US 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 is the third largest less-than-truckload carrier in the US and has some 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.