Yellow gets additional DIP loan proposals, new hearing set for Tuesday

By Sarah Lizee

Olympia, Wash., Aug. 11 – Yellow Corp.’s counsel told the U.S. Bankruptcy Court for the District of Delaware at a hearing held Friday that it has received more proposals for debtor-in-possession financing, in addition to the three offers it is already considering.

As a reminder, the company filed bankruptcy with a $644 million (with $142.5 million new money, and the rest a rollup) senior secured super-priority DIP package via prepetition B-2 term loan lenders in hand. Apollo Global Management is the majority lender, with Alter Domus Products Corp. the administrative agent and collateral agent.

During the week, however, the company received two alternative financing proposals and told the court Wednesday that it was considering its options.

Specifically, 40% equity owner MFN Partners has offered to provide $142.5 million in new money without a rollup. Counsel said the deal is less expensive regarding its fees and provides for a longer, 180-day maturity. The debtors would also likely have more flexibility in how their assets are marketed.

However, MFN was initially proposing that the debt be pari passu to the term loan B-2 debt, which the B-2 lenders take issue with. Counsel for the debtor said Friday that MFN has now agreed to offer the financing on a junior basis.

The debtors received another $142.5 million 180-day financing proposal from Estes Express Lines, being offered on a junior basis. The former Yellow competitor has also conveyed that it would be willing to upsize the financing to $230 million to give the debtors enough funds to pay priority and administrative employee obligations, counsel for Yellow said at the Wednesday hearing.

Notably, the interest rate under the Estes deal is also 2% less than the other two proposals, and the fees are 1% less than the 5% of new money offered by MFN. The fees associated with the B-2 lenders’ offer are at least 5% of the new money.

Counsel said Friday that the new financing proposals are also being offered on a junior basis.

The company was hoping to file an amended motion for DIP financing prior to a Friday morning hearing, but with the other inbound offers, has decided to hold off until a Tuesday hearing.

As background, the company has ceased all operations and is now in the process of trying to sell its assets and wind down.

Counsel for the debtor said that it is cautiously optimistic that there will be enough sale proceeds to provide a distribution to unsecured creditors.

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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