Dive Brief:
- Estes Express Lines’ $1.525 billion offer for Yellow Corp.’s terminals was approved by a federal bankruptcy court in Delaware on Thursday as the stalking horse bid for the shuttered LTL carrier’s properties.
- The court authorized a $7.5 million breakup fee and $1.6 million in expense reimbursement.
- Some or all of the properties could still go to other buyers in a court-supervised Nov. 27 auction. Trucks, trailers and other equipment are scheduled to be sold in a separate auction Oct. 18.
Dive Insight:
Locking in Estes’ offer sets the floor valuation for Yellow’s terminals and assures the bankrupt carrier’s ability to cover $1.2 billion in debt to its largest lenders, including $700 million from the Treasury Department.
“We are pleased to announce that we have been formally approved by the court as the real estate stalking horse bidder,” Estes said in an emailed statement. “We continue to believe our transaction is mutually beneficial to both Estes and the Yellow bankruptcy estate. We look forward to continuing in this process and working collaboratively with the parties in the case, and we appreciate everyone’s continued efforts.”
The breakup fee and expense reimbursement are key advantages Estes gains in outbidding longtime competitor Old Dominion Freight Line as stalking horse, said George Singer, bankruptcy partner at the law firm Holland & Hart.
Other bidders aren’t assured any compensation as they pursue property deals, Singer noted.
Old Dominion kicked off a real estate bidding war last month, raising Estes’ initial $1.3 billion offer for the properties with a $1.5 billion bid.
The court also authorized Yellow’s lenders to extend a loan of $100 million as the company winds down and prepares for the asset sales, Yellow said in a securities filing.
The International Brotherhood of Teamsters, which Yellow resorted to suing before going belly-up, is clamoring for the federal government to scrutinize the bankruptcy proceedings on behalf of its 22,000 members who lost their jobs.
The Teamsters called this week for the Senate to hold hearings to investigate the events surrounding the carrier’s demise, blasting millions in executive bonuses paid as the company deferred worker pension payments.
