The Boston-based investment firm that last month began building a large holding in Yellow Corp. spent yet another $12 million on July 31 to buy up more shares of the beleaguered less-than-truckload giant, which ceased operations last weekend and is expected to file for bankruptcy any day.
The leaders of MFN Partners Management now control nearly 22.1 million shares—the largest of any shareholder of Nashville-based Yellow, which is the nation's third-largest LTL and is No. 6 on the FleetOwner 500 Top For-Hire Fleets of 2023 but late last week emptied its network of freight and then locked all of its terminal gates.
MFN's stake amounts to more than 42% of Yellow’s shares—which have improbably risen fivefold in value since July 28—and puts the firm in position to have a major say in any potential liquidation or restructuring of the nearly 100-year-old company’s assets and liabilities. (The federal government owns 30% of Yellow’s shares, a stake the U.S. acquired during the Trump administration and the pandemic as part of terms of a $700 million loan to the company.)
MFN officials have not responded to requests for comment this week from FleetOwner. After ceasing all operations, Yellow has made no public announcements about its fate other than a link on its website for customers to submit questions about shipments. The company has publicly gone dark since.
See also: 100-year-old Yellow shuts down, heads to bankruptcy
But Yellow executives have laid off many of the company’s 8,000 non-union employees in its 300-plus terminals, offices and other facilities nationwide after battling with the International Brotherhood of Teamsters about their plans to streamline the company and integrate the networks of its various brands. Teamsters employees make up about 22,000 of the company's total workforce of 30,000, and the union pledged in a statement on Monday that it would provide transition services to its members in the wake of Yellow telling the union that it planned to shutter operations and file for bankruptcy. Analysts such as Stifel predicted earlier this week that Yellow's dissolution would take the form of Chapter 7, which calls for the sale of a debtor's property and the distribution of proceeds to creditors.
The first phase of execs' restructuring plan, dubbed One Yellow, was completed about a year ago and integrated the networks of YRC Freight and Reddaway in the western part of the U.S. Two subsequent phases were to have accomplished the same type of work for Yellow’s operations in the Northeast, Midwest, and Southeast, but the Teamsters balked at the changes executives had in mind. Later, Yellow couldn't make pension and health care benefits payments; the Teamsters threatened to strike on July 31 but received a 30-day extension from the benefits funds' administrator, Central States; and the sides reportedly went into emergency talks over how to save the company, which traces its roots to 1924 and an Oklahoma City bus line and taxi cab company.
Terminals could be front and center in a liquidation
As part of the One Yellow restructuring, CEO Darren Hawkins and his team have been offloading a few of the company’s terminals and other real estate holdings—assets likely to take center stage during attempts to extract value on behalf of the company’s debt and equity investors. The company in 2022 booked a $38 million gain on property sales, more than $28 million of which came from a single site, and pocketed about $45 million from similar transactions in 2020.
See also: Yellow teeters: Layoffs begin, 3PL subsidiary on the block
In their most recent quarterly report (for the three months ended March 31), Yellow executives listed the company as having nearly $3.1 billion worth of gross property and equipment. According to the FleetOwner 500, Yellow possesses 14,127 total tractors and 43,287 trailers, accounting for nearly half of that $3.1 billion, while land and buildings are being valued at about $1 billion. By comparison, the company has about $2.1 billion of debt on its books.
MFN Partners Management, which manages more than $2 billion for its clients, has paid nearly $23 million to build its stake in Yellow, giving it a cost basis of $1.04 per share. Based on the surge in Yellow shares this week—in mid-afternoon trading on Tuesday, they were changing hands at about $3.16—the MFN team already is sitting on a paper gain of nearly $47 million on that $23 million investment.
ATA opens jobs database to aid former Yellow employees
Trucking industry federation American Trucking Associations has launched a new database to help former Yellow employees connect with prospective new employers and gain new jobs in trucking.
“Yellow’s closure is a substantial blow to America’s economy and the company’s 30,000 hard-working employees and their families in all 50 states,” ATA President and CEO Chris Spear said in an Aug. 1 statement from the Washington, D.C.-based trade group.
“Since its founding nearly a century ago, Yellow has been an integral part of our supply chain. As the nation’s first less-than-truckload carrier, it was a key part of trucking history as well. Through the company’s involvement with American Trucking Associations, Yellow employees promoted the industry and were tremendous advocates for highway safety, leading by example,” Spear added.
“The past several days have been especially difficult for drivers, dockworkers, mechanics, salespeople, administrative and support personnel, and other employees, many of whom dedicated decades of their careers to the company. Yellow personnel earned a well-deserved reputation as being professional and solution-oriented, helping countless customers to seamlessly navigate the complexity of logistics to ship their products on time virtually anywhere in the country,” he continued.
“Our message to former Yellow employees is that we want them to remain a part of the industry that they have done so much to build and strengthen.”
Managing Editor Scott Achelpohl contributed to this story.
