Estes Express Offers $1.3 Billion For Ex-Rival Yellow’s Terminals—After 99-Year-Old Trucker Declared Bankruptcy

Topline

Trucking company Estes Express Lines wants to buy all of its now-bankrupt rival Yellow Corp.’s terminals for $1.3 billion, but it could get outbid in a potential auction, Bloomberg reported—as Yellow begins to liquidate after 99 years.

In this Feb. 3, 2010 photo, Yellow trucks are seen at a truck terminal in St. Louis. (AP Photo/Jeff … [+] Roberson)

Key Facts

Estes’ offer—raised in court Thursday—will reportedly serve as a stalking horse bid, which is an initial bid that sets the starting price for an auction.

This means that if a better offer materializes in the weeks ahead or a chapter 11 auction occurs and someone outbids the company, Estes Express Lines will have to either pony up more cash or miss out on the deal.

Yellow Trucking also plans to sell its tractor-trailers, Bloomberg reported.

Key Background

Kansas-based Yellow Corp. was the third largest less-than-truckload carrier in the U.S., but it filed for bankruptcy earlier this month, leaving 30,000 employees—22,000 of whom were members of the Teamsters Union—jobless and the company’s fleet of 12,000 trucks in limbo. The company became the first carrier to file for bankruptcy in over 20 years, since Consolidated Frieghtways filed for bankruptcy in 2002. The bankruptcy came despite receiving a $700 million taxpayer-funded loan from the federal government during the pandemic, which it was given because it had contracts with the Department of Defense. This leaves many to wonder how that debt will be repaid.

What To Watch For

Virginia-based Estes Express Lines, which has been incorporated since 1948, was a longtime competitor of Yellow Corp. If Estes isn’t outbid, the sale sale would boost the company’s slate of over 270 terminals. It could also prompt increases in its workforce and truck slate which sits at around 10,000 tractors and 37,000 trailers, according to the company. The company employs more than 22,000 people.

Tangent

Yellow Corp. is also set to receive bankruptcy loans from Citadel and MFN Partners, two hedge funds, Bloomberg and Reuters reported. Citadel, run by famous investor Ken Griffin, is offering a $100 million loan, while MFN Partners—which is Yellow Corp.’s biggest shareholder—is offering $42 million. MFN Partners said it could provide an additional $70 million in the future if necessary. Citadel’s deal comes after the hedge fund purchased roughly $485 million of Yellow Corp.’s debt, which was previously owned by Apollo Global Management Inc. and other lenders.