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The attorney for trucking company Yellow Corp announced in court on Friday that negotiations on a bankruptcy loan would be postponed until next week in order to evaluate at least two alternative loan ideas that would bring in an additional $142.5 million.
On Sunday, Yellow declared bankruptcy with a loan proposal for that sum from private equity firm Apollo, a senior lender to the business prior to bankruptcy. The trucking company announced earlier this week that it was looking for alternative financing from Estes Express Lines, a competitor in the freight trucking industry, and MFN Partners, a financial organization that holds 41% of Yellow’s stock.
At a Friday court hearing in Wilmington, Delaware, Yellow’s attorney Pat Nash informed U.S. Bankruptcy Judge Craig Goldblatt that the company is still negotiating those proposals and has recently received further loan offers.
By the start of the following week, Nash predicted that Yellow will select one of the loans, which are “far more favorable” than Apollo’s original offer.
Yellow plans to liquidate all of its assets, including its 12,000 trucks and more than 300 shipping service locations, during its bankruptcy.
Nash stated that the new loans would be subordinate to $1.2 billion in loans from Apollo and the U.S. Treasury Department, which has all of Yellow’s vehicles and real estate claimed as collateral on their loans.
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Confident Yellow Seeks Full Cost Recovery from Apollo and US Treasury
He stated that Yellow is trying to secure the senior lenders’ approval to take on more debt.
Yellow has stated that it is confident it can fully recoup its costs from Apollo and the US Treasury.
Apollo turned down MFN’s initial offering, which would have put its new loan on an even footing with the approximately $500 million in debt Apollo owed. Dennis Dunne, the lawyer for Apollo, stated on Friday that his client is “absolutely willing” to cooperate with new lenders as long as its collateral rights are preserved.
Yellow suspended all activities in the weeks before filing for bankruptcy, attributing its demise to a labor disagreement with the International Brotherhood of Teamsters union. Some 22,000 laid-off Yellow employees are represented by the union, which claims the firm “mismanaged” its way into bankruptcy.
Yellow owes the U.S. Government moreover $700 million in relation to a pandemic bailout loan that was approved by the administration of the late President Donald Trump in 2020.
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Source: Reuters
