Date: Tuesday, August 22nd, 2023
Source: Wall Street Journal
Old Dominion Freight Line stepped up competition for bankrupt trucker Yellow’s sprawling North American real-estate holdings, outbidding a rival operator with a $1.5 billion offer for the properties.
The bid surpasses a $1.3 billion proposal by Estes Express Lines and signals a potentially spirited bankruptcy court-supervised auction for the network of 169 truck terminals that would provide Yellow with more than enough money to roughly cover the loans the company accumulated before its chapter 11 filing this month.
Yellow was in business for 99 years before the company collapsed this summer. Its terminals include sought-after sites close to major metropolitan areas that are ideal for trucking and logistics companies looking to store and deliver goods quickly to homes.
A lawyer for Yellow said earlier this month in bankruptcy court that the company had received formal expressions of interest in Yellow’s assets from almost 100 parties. Executives at several rival trucking companies have said they would be interested in buying some of Yellow’s locations. ODFL’s bid was disclosed in a court filing, setting up the Thomasville, N.C.-based operator as the stalking horse bidder, meaning its offer is subject to higher or better proposals at a court-supervised auction, for Yellow’s properties.
ODFL officials didn’t immediately respond to a request for comment.
With about $6.3 billion in revenue last year, the trucker is the nation’s second-largest less-than-truckload carrier, a sector of the trucking market which moves shipments for multiple customers on the same trailer, just ahead of Yellow’s position in that sector in 2022. The company operates 256 service centers in 48 states, according to an investor presentation this month, and carried about $55.1 million in cash or cash equivalents at the end of the second quarter ending June 30.
The carrier’s bid would more than cover the $1.2 billion Yellow owes its biggest lenders, including the U.S. government, which is seeking repayment of a $700 million loan.
Yellow has also accepted an offer from hedge fund Citadel and MFN Partners, the trucker’s largest shareholder, to jointly provide a $142 million bankruptcy loan,according to Yellow lawyer Allyson Smith. The loan will fund operations at the business as it winds down and sells assets, including the properties and tens of thousands of truck tractors and trailers.