Estes Express Lines is again leading the pack of possible buyers of most of Yellow Corp.’s real estate holdings.
Richmond, Virginia-based Estes Express, which is No. 11 on the FleetOwner 500 list of top for-hire fleets, first publicly showed itself as interested in Yellow’s network of more than 160 terminals shortly after Yellow filed for Chapter 11 bankruptcy on Aug. 6. But after initially being chosen as the "stalking-horse" bidder (such a bidder sets the floor in auction) with an offer of $1.3 billion, Estes Express was edged out by a $1.5 billion offer from rival less-than-truckload carrier Old Dominion Freight Line, the No. 10 carrier on the for-hire FleetOwner 500.
Attorneys for Yellow on Sept. 13 told District of Delaware U.S. Bankruptcy Court Judge Craig T. Goldblatt that they have in recent weeks been “engaged in hard-fought negotiations” with both Old Dominion and Estes. The result: an agreement, signed Sept. 12, that will again have Estes Express be the top bidder, this time with a cash offer of $1.525 billion. Estes Express executives also have committed to store Yellow trucks, trailers, and other equipment at acquired terminals rent-free for 30 days, something they say is worth more than $10 million.
See also: Five questions ahead of decisive Yellow bankruptcy hearing
The new proposed deal has Estes in line to receive a breakup fee and expense reimbursements of $9.1 million in total should the company not win the bidding. That amount, Yellow’s attorneys said in a court filing, is lower than previous terms and well below the typical fees agreed to in Delaware’s bankruptcy court. Were standard rates to be applied in this case, they say, the fees would top $60 million.
“The Debtors believe that the Real Estate Stalking Horse [agreement] represents the highest and otherwise best value-maximizing stalking horse arrangement for the Owned Properties,” the attorneys wrote, noting that the $1.525 billion more than covers Yellow’s pre-bankruptcy secured debts. Additional proceeds from auctions of the company’s properties and its more than 12,000 trucks, 42,000 trailers, and other equipment will then be distributed to unsecured creditors.
Timelines more in focus for terminal, equipment sales
Also on Sept. 13, investment banker Cody Leung Kaldenberg of Ducera Partners, the firm Yellow hired to market its assets, outlined the latest proposed timelines for the sales of Yellow’s terminals and equipment.
The Ducera team is looking to run separate bidding processes for those asset categories, with bids for rolling stock due Oct. 13 with an auction to follow five days later and sales to be concluded by Nov. 3. For Yellow’s real estate holdings and other assets (including intellectual property such as website addresses), Leung Kaldenberg and her colleagues are proposing that bids be submitted by Nov. 9, to be followed by an auction Nov. 27 and a court hearing approving deals Dec. 12.
Leung Kaldenberg and Yellow's lawyers also have outlined the fruits so far of Ducera's work to generate interest in Yellow's real estate and gear: The investment bank has contacted 540 entities, 307 of which have signed confidentiality agreements that grant them access to detailed information about what they would be bidding on. Of those firms—which are both trucking companies and financial buyers—more than 120 have signed so-called indications of interest in at least some of Yellow's assets. If most of them stick around until the auctions this fall, the bidding could get fierce.
