Dive Brief:
- XPO will use an $870 million bridge-term loan from Crédit Agricole Corporate and Investment Bank to pay for its dozens of winning bids on Yellow Corp. truck terminals, the company said in a securities filing Tuesday.
- The loan enabled the Greenwich, Connecticut-based LTL carrier to put down more than triple the $248.7 million in winning bids by Estes Express Lines, the second-biggest overall spender at the bankruptcy auction so far.
- The one-year loan facility, which can be extended another 12 months, will be available to be borrowed by XPO “on or prior to March 7,” subject to conditions such as the bankruptcy court’s approval of the pending terminal sales, the filing said.
Dive Insight:
XPO spent by far the most of any bidder at the auction, signaling its determination to grow its network in the markets it views as key to its LTL 2.0 plan.
XPO placed winning bids on 26 terminals and two leases. The real estate is spread across the country, as far flung as Portland, Oregon; Bakersfield, California; Houston; and Brooklyn, New York.
XPO's winning bids for Yellow terminals
XPO’s LTL 2.0 plan, which has helped the carrier gain volume in a tough freight environment, includes long-term investments in capacity and service quality. It has helped reduce damage claims while adding 900 terminal doors by the end of the year.
The documents showed each bidder’s winning bid totals. But they did not specify the winning bid for each terminal, except for a handful of individual properties, including several that received back-up bids.
XPO expects the cost of acquiring Yellow’s assets will gradually help increase profits in 2024 but dilute earnings per share from continuing operations throughout the year. However, starting in 2025, the properties are expected to incrementally grow its “adjusted diluted earnings from continuing operations per share,” XPO said in its filing.
XPO’s bridge loan from the Paris-based bank will be secured by its assets on a pari passu, or “equal footing,” basis with XPO’s existing senior secured term loan facility and senior secured notes, due in 2028.
The LTL carrier also intends to kick off a private offering of $585 million in senior unsecured notes due in 2032 and seek commitments for $400 million in senior secured term loans maturing 2031 under its existing term loan facility.
Law firm Wachtell, Lipton, Rosen & Katz is advising XPO on the acquisitions and borrowing.
