Yellow Corp. said a new offer from Estes Express Lines valued at $1.525 billion is superior to a previous bid from Old Dominion Freight Line for the bankrupt trucker's real estate portfolio, but another offer could still emerge.
Judge Craig Goldblatt with the U.S. Bankruptcy Court for the District of Delaware is scheduled to designate the stalking-horse bidder on Sept. 22 for Yellow’s truck terminals in the United States and Canada.
Yellow is trying to sell about 170 truck terminals and other commercial properties to raise funds to pay off creditors in its Chapter 11 bankruptcy proceedings. Brokers who specialize in transportation-related real estate say Yellow’s portfolio of owned properties includes desirable locations in markets including Atlanta, Boston, Chicago, Phoenix and Sacramento, California. Yellow’s terminals are already zoned for industrial and trucking uses, making them more valuable in cities where that zoning designation is difficult to obtain.
Yellow, based in Nashville, Tennessee, filed for bankruptcy last month after 94 years in business after a series of acquisitions of trucking companies saddled it with too much debt. Yellow has since ceased operations. The U.S. Treasury Department is one of Yellow's largest creditors due to the company's $700 million federal loan during the pandemic.
Estes, based in Richmond, Virginia, was Yellow’s original preferred stalking-horse bidder last month with a $1.3 offer. But Thomasville, North Carolina-based Old Dominion later outbid Estes with a $1.5 billion offer, which Yellow accepted.
Now, Yellow has gone back to Estes as its preferred bidder. In addition to the higher price of $1.525 billion, Estes said it would accept a lower termination fee of $7.5 million if it’s not chosen as the winning bidder and $1.6 million of expense reimbursements. Old Dominion had offered a breakup fee of up to $26 million.
Estes also said it will provide Yellow with 30 days of free storage for its trucks and trailers, a deal the company values at $10 million, according to court documents.
Estes and Old Dominion both operate in the less-than-truckload category of the trucking industry, where they carry freight from more than one customer on the same trailer.
Other Bidders
Although Estes’ latest bid is for the entire Yellow portfolio, other bidders may emerge with higher offers for certain pieces of Yellow’s property inventory. Ducera Partners, Yellow’s investment banker for its real estate portfolio, said in a Wednesday court filing that a third potential bidder it did not identify has been in extensive talks with Yellow about the terms of its offer but has not yet completed its bid offer.
Ted Morandin, managing member at Morprop Advisors, said companies in several segments of the transportation industry could submit bids for specific Yellow parcels, including companies that operate long-term truck parking, outdoor storage of heavy equipment, truck dealerships, pallet distributors, roof truss builders, garbage haulers and facilities that handle the movement of containers in and out of ocean port terminals. Morandin is not involved in the Yellow bankruptcy case.
Ducera Partners proposed a bid deadline of Nov. 9 for the trucker’s real estate portfolio, an auction on Nov. 28 and a court hearing to approve the deals on Dec. 12. Judge Goldblatt has not yet ruled on those proposed dates.
Ducera Partners created an online database of Yellow’s real estate portfolio that is only accessible to potential bidders who sign non-disclosure agreements, according to a court filing. Ducera Partners said about 120 potential bidders have expressed interest in the Yellow portfolio since it filed for bankruptcy.
Separately, Judge Goldblatt on Thursday approved Yellow’s rejection of more than three dozen leased properties in the Unites States and Canada. Some leased properties are truck terminals in major markets, including Atlanta; Richmond, Virginia; Seattle; and Toledo, Ohio. The rejected leases include Yellow’s corporate headquarters in Nashville and its regional headquarters in Overland Park, Kansas.
In addition to its namesake line of trucks, Yellow also operated trucking lines under the names Roadway Express, New Penn Motor Express, USF Bestway, USF Holland, USF Reddaway and USF RedStar. Truck terminals serving those lines are part of Yellow’s portfolio, available for sale through bankruptcy court.
For the Record
Cody Leung Kaldenberg at Ducera Partners is the lead investment banker for Yellow. Kirkland & Ellis and Pachulski Stang Ziehl & Jones are legal counsel to Yellow. Whiteford, Taylor & Preston is legal counsel to Estes Express Lines. BakerHostetler is legal counsel to Old Dominion.