Yellow picks DIP loan, gets $1.2 billion Estes stalking horse bid

By Sarah Lizee

Olympia, Wash., Aug. 17 – Yellow Corp.’s counsel told the U.S. Bankruptcy Court for the District of Delaware at a hearing held Thursday that it has reached an agreement in principle for $142.5 million new money debtor-in-possession financing after mulling several offers over the last week.

As previously reported, the company received proposals from its prepetition term B-2 lenders, its 40% equity owner MFN Partners, and rival Estes Express Lines, as well as others that weren’t named.

The deal Yellow has decided to go with is being provided by MFN and investment firm Citadel LLC.

Citadel just bought $500 million of Apollo’s term loans, making it the company’s newest B-2 lender.

Citadel has agreed to provide $100 million of the new money, pari with the existing term B-2 debt, and with no rollup of prepetition debt. MFN will provide the remaining $42.5 million in new money on a junior basis, coming in second on the B-2 priority collateral, but junior to the rest of the secured collateral.

Citadel and MFN will each receive 4% in DIP fees on the money they’re providing. MFN’s portion will bear interest at 15% per annum, and Citadel’s will earn interest at the same rate as under the prepetition B-2 term loan.

MFN has agreed to provide an additional $70 million delayed-draw on a completely junior basis, if needed.

The company has also received a $1.2 billion stalking horse bid from Estes for all 166 of the company’s truck terminals.

Counsel for the debtor noted that proceeds from the Estes bid would cover nearly all of the prepetition secured capital structure.

The company still plans to move forward with a competitive sale process for the truck terminals, as well as for the rest of its assets.

Yellow’s counsel said the terms of the DIP financing and stalking horse bid reflect significant improvements in savings to the estates, compared to the previous offers.

Specifically, the DIP fees are reduced to 4% of new money, down from 23% to 34%, providing for potential savings of $27 million to $43 million. The reduced interest rates reflect savings of about $300,000.

And the longer 180-day maturity and extended milestones will give the company more flexibility to run the sale process.

The company is still working on finalizing documentation for the transactions.

Yellow is a provider of regional, national and international shipping services based in Nashville. The company filed bankruptcy on Aug. 6 under Chapter 11 case number 23-11069.

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