Yellow Corp., headquartered in Nashville, Tennessee, is currently engaged in ongoing negotiations with multiple interested parties who are considering funding the company’s bankruptcy process. These discussions are scheduled to continue until August 15th.

According to Patrick Nash, the leading bankruptcy attorney from Kirkland & Ellis representing Yellow Corp., talks have been ongoing with several entities including Estes Express Lines, a competitor in the less-than-truckload (LTL) sector, and hedge fund MFN Partners. These discussions gained momentum after a hearing on August 9th. These parties are expressing a willingness to provide financial assistance to Yellow Corp., a company with a history of 99 years, as it undergoes its winding-down phase.

Estes Express Lines, headquartered in Richmond, Virginia, has submitted term sheets outlining a proposal to lend Yellow Corp. $230 million. Estes Express Lines holds the 14th position on the Transport Topics Top 100 list, which ranks the largest carriers in North America. However, the company’s spokesperson declined to comment on their involvement in these proceedings.

In terms of the rankings, Estes Express Lines stands as the 5th largest LTL carrier, while Yellow Corp., prior to its closure on July 30th, held the third position among LTL carriers. Additionally, Yellow Corp. occupied the 13th spot on the for-hire Transport Topics 100 list.

Nash is confident that at least one of these entities, especially considering that MFN is Yellow Corp.’s primary shareholder, will proceed with a concrete offer to extend a loan for the company’s benefit.

“I have optimism that we’ll have one of those parties posting; maybe we’ll have both of those parties posting, which will make this even more interesting. But we think we’re going to have at least one of those parties posting, willing to put in money on a junior basis, on terms and conditions that work for the pre-petitioned secured parties as well as for the debtors,” Nash told Judge Craig Goldblatt.

Should this scenario materialize, it will undoubtedly present a much more advantageous situation. Patrick Nash emphasized that this outcome would hold significant benefits, particularly when contrasted with the financing proposition presented by funds under the leadership of Apollo Global Management. This is especially noteworthy due to the distinct positioning of both Estes Express Lines and MFN Partners in terms of repayment hierarchy, placing their loan offers behind those of Apollo and other existing lenders.

Apollo Global Management’s proposal centered on providing a short-term loan to facilitate the refinancing of Yellow’s debt, which exceeded $500 million. It’s worth noting that this offer was on the table even before Yellow initiated Chapter 11 bankruptcy proceedings on August 6th. It’s within Yellow’s prerogative to replace the Apollo offer if a more favorable alternative emerges.

Dennis Dunne, representing Apollo as the senior secured lender, highlighted the group’s willingness to collaborate with parties interested in extending loans to Yellow while adhering to a repayment structure that places them below Apollo in priority.

Regarding MFN Partners, while their current loan terms are categorized as “junior,” positioning their repayment within a similar queue as Estes Express Lines, Eric Winston from Quinn Emmanuel Urquhart & Sullivan, representing the fund, emphasized that MFN is strongly motivated by the pursuit of the most advantageous terms prevailing.

“We want to make sure whomever is the [debtor-in-possession] lender … it allows for the estate to have a robust marketing process [and] doesn’t give a leg up to anyone that is interested in bidding … [whoever that is] should be the most efficient economically, but efficient to allow for that robust marketing process,” he said.

Following mutual agreement, a hearing is scheduled for August 15th at 1 p.m. Eastern Daylight Time (EDT), signifying the forthcoming phase in this progression. As part of this advancement, Goldblatt has concurred with strategies aimed at maintaining the optimal state of Yellow’s dormant assets, ensuring their appeal to prospective purchasers.

Subsequently, the bankruptcy judge granted approval for the allocation of $1.5 million. This sum is designated to address utility payments for a span of two weeks, covering a total of 311 transportation centers associated with Yellow. Notably, out of this count, Yellow possesses ownership of 169 of these centers.

Source: www.ttnews.com