The $1.88 billion sale of 130 of Yellow’s less-than-truckload terminals was approved by a Delaware bankruptcy court on Tuesday. A revised sale order is expected to be received by the court and entered into record Tuesday afternoon.
“Preliminarily based on what’s represented, this is obviously a tremendous outcome,” Judge Craig Goldblatt said.
The process included more than 400 interested parties completing nondisclosure agreements with 70 qualified bidders taking part in the auction that began Nov. 28. This first wave of terminal sales ends with 21 entities, mostly LTL carriers and their real estate arms, committing to purchase the properties at values that far exceed a prior appraised value of $1.1 billion.
The auction of Yellow’s more than 140 leased terminals is set to resume on Monday with a sale hearing set for Jan. 12. Yellow’s estate is still in the process of selling the remaining 46 owned locations.
Individual acquisition agreements filed with the court show the property closings are expected to occur by Feb. 6, with the allowance of a one-time 30-day extension. However, a recent filing asked the court for a quick approval on the sale so the estate could take advantage of tax benefits and reduce interest expenses. The document showed that closing “at least a portion of the Sale Transactions” before year-end would save the estate $37 million in taxes. Interest expense for a portion of the bankruptcy financing package is costing the estate $230,000 per day.
BidderTerminal countPurchase priceXPO28$870MEstes24$248.7MSaia17$235.7MRAMAR Land Corp. (R+L Carriers)8$211.5MTerminal Properties, LLC (Pitt Ohio)7$83.8MKnight-Swift Transportation13$51.3MArcBest 3$30.2MA. Duie Pyle4$29.4MTForce2$16MSoutheast Consolidators1$8.5MSkylark Logistics2$8MZ Brothers Trucking1$4.2MUnis2$2.4MTable: Court filings
XPO (NYSE: XPO) will spend $870 million for 28 of Yellow’s terminals, a prior filing showed. Its acquisition will also include a leased terminal in Brooklyn, New York, the transfer of which had been contested by the landlord. Yellow’s attorney said on Tuesday the estate will pay $300,000 in costs to cure the lease and make repairs.
XPO recently announced a bridge loan to fund the acquisition. It’s targeting a $585 million private notes offering and seeking $400 million in term loans to repay the bridge and other debt.
Estes, which set the price floor for the process with a $1.525 billion stalking horse bid, is expected to walk with 24 terminals valued at nearly $250 million. Saia (NASDAQ: SAIA) rounds out the top three bidders with an agreement for 17 properties valued at $236 million.
Yellow’s 12,000 tractors and 35,000 trailers were previously approved by the court for sale through auction houses. Those assets could fetch a few hundred million dollars as the middle tiers of that fee structure range from $475 million to $800 million.
Yellow’s liquidation is expected to generate proceeds in excess of the roughly $1.8 billion in debt held by secured lenders and the hedge funds providing bankruptcy financing.
There are approximately 200 potential claims, “substantially all of which allege bodily injury or property damage stemming from automobile incidents involving the Debtors’ trucks and/or drivers,” a recent filing showed. The court was informed Tuesday by Yellow’s counsel that alternate dispute resolution procedures have been established to settle the claims. Prior filings show Yellow has liability insurance commitments, which carry self-retention limits of $6 million.
Yellow recently objected to nearly $6 billion in claims filed by the Central States Pension Fund. Approximately, $4.8 billion of the amount stems from the company’s withdrawal from the pension fund with the remainder tied to unpaid contributions.
Yellow asserts the fund is attempting a “double recovery,” noting that it received $35.8 billion from a federal rescue package for multiemployer pension plans. Yellow said it doesn’t have any withdrawal liability as the fund no longer has unfunded vested benefits. It also said its participation in the fund was terminated by Central States in July when it failed to make required contributions, thus ending its exposure to accruals.
Yellow estimates any exposure to be “far below $1 billion, even if there is withdrawal liability at all.”
A Jan. 22 hearing has been set on the matter.
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