It appears neither Old Dominion nor Estes Express will secure all the prized Yellow Corp terminals after about a dozen former LTL rivals cobbled up properties in what amounts to a bankruptcy fire sale.
“This will not be a case where you can make a bid in bankruptcy and pick up assets cents on the dollar. This will be a very competitive, value-maximizing auction,” George Singer, a partner at Denver-based Holland & Hart, reportedly said of the bankruptcy fallout.
The now-defunct 99-year-old trucking operation folded at the end of July, owing more than $1.3 billion due for repayment in 2024, including a $700 pandemic loan. Its properties were reportedly valued at $1.1 billion at the time it filed for bankruptcy. However, former competitors ponied up nearly $2 billion, upending any chance of Estes and its $1.525 billion stalking horse bid, or Old Dominion’s $1.5 billion offer for the total assets, could potentially put 30,000 employees back to work.
According to reports, a court-supervised auction sold off approximately 90 percent of Yellow’s 170 North American trucking terminals and 75 percent of its total real estate for slightly less than $1.9 billion. The sales must still be approved at a court proceeding scheduled for Dec. 12 at the U.S. Bankruptcy Court in Delaware. The remaining properties are expected to fetch hundreds of millions in the coming months, which may allow Yellow to pay most, if not all, of its creditors.
The lottery winners of the auction so far include XPO. The third-largest LTL carrier secured 28 properties, including one of Yellow’s crown jewels for $870 million, the Carlisle, Pa., location. Although Estes Express may be disappointed the organization couldn’t onboard the entire Yellow operation, it managed to purchase 24 terminals for upwards of $249 million. Based in Johns Creek, GA, Saia bought 17 properties for $236 million. Knight-Swift Transportation acquired 13 properties for $51.3 million. Old Dominion was not reportedly listed as a property buyer during the first wave of auctions.
Singer, a bankruptcy and finance expert, also noted that real estate buyers may be inclined to pivot and sell off some of the properties to finance the ones they covet. Following the Dec. 12 hearing in Delaware and subsequent sales, Yellow’s properties could remain in play deep into 2024.
Sources:
https://www.wsj.com/articles/yellow-rivals-scoop-up-truck-terminals-in-bankruptcy-auction-945b9425
https://www.freightwaves.com/news/first-wave-of-yellow-terminals-to-go-for-1-9b-sale-process-ongoing
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