Trucking firm prepares long-shot bid for Yellow, seeks US Treasury support

Yellow

30/10/2023 12:18

(Updates paragraph one to reflect administration's approach)
    By Jarrett Renshaw
       Oct 30 (Reuters) - One of the largest U.S. privately
owned auto transport companies is quietly mounting a long-shot
bid - with increasing interest from the Biden administration -
to rescue trucking giant Yellow Corp  YELLQ.PK  from bankruptcy
liquidation and bring back some 30,000 union jobs, according to
multiple sources familiar with the discussions. 
    The previously unreported effort by Jack Cooper Transport, a
trucking company that counts General Motors  GM.N , Ford  F.N 
and Stellantis  STLAM.MI  as its main customers, has gained
steam in recent weeks as the powerful International Brotherhood
of Teamsters union and a bipartisan group of U.S. senators
stepped up their pressure campaign on the Biden administration.
    Yellow filed for bankruptcy protection in August. The
piecemeal liquidation of Yellow's vast trucking and terminal
assets could begin next month, in a deal that is expected to
value its real estate at $1.5 billion and its vehicle fleet at
hundreds of millions of dollars. 
    U.S. Senators including Democrat Sherrod Brown, Republican
Roger Marshall and Bernie Sanders, an Independent, asked the
Treasury Department in separate letters reviewed by Reuters to
extend the maturity date for $700 million in COVID pandemic
loans given to Yellow Corp by the Trump administration in 2020,
in exchange for the government taking a stake of nearly 30% in
the company.
    The loans currently come due in September 2024. Jack
Cooper's bid effort hinges largely on whether Treasury extends
the payback period to 2026, allowing Jack Cooper to offer more
favorable terms for Yellow, because it would not have to pay the
loan back right away.
    Jack Cooper officials, including Executive Chair Sarah
Amico, have been talking with Biden administration officials in
recent months to get support for extending the terms of the
loan. Amico ran unsuccessfully as a Democratic candidate for the
U.S. Senate in Georgia in 2020. 
    Those discussions, which include the Teamsters, have ramped
up in recent weeks, sources said.
    Lael Brainard, head of the White House National Economic
Council, and Brendan Danaher, the White House's top labor
adviser, have received inquiries about a potential Jack Cooper
bid and the White House has been kept up to date by stakeholders
on the effort, the sources said. 
    The White House said it was referring all Jack Cooper
stakeholder inquiries to the Treasury Department. Treasury had
no comment on whether it was considering a loan extension.
    
    UNION WORKFORCE 
    "It is unfortunately necessary for Treasury to take these
steps to save tens of thousands of union jobs that have already
experienced hardship due to Yellow’s years of mismanagement,"
Democratic U.S. senators including Bob Casey from Pennsylvania
and Tammy Baldwin of Wisconsin wrote.
    Treasury is actively looking at whether it can extend the
loan, along with other obstacles, the sources said.
    Jack Cooper and the Teamsters union declined to comment. 
    Any bidder would need to persuade Yellow's largest creditor,
Citadel, and its largest equity holder MFN Partners of the value
of an alternate deal. 
    Yellow owns approximately 12,000 trucks and 35,000 trailers,
along with hundreds of terminals, according to its bankruptcy
court filing. The company hopes to sell the truck and terminal
assets separately, complicating any effort to purchase the whole
company.
    The Biden administration has embraced the nation's union
workforce and has tried to drive down inflationary costs
associated with spikes in transport costs, making any deal that
keeps trucks and drivers on the roads politically attractive. 

    BANKRUPTCY BREAKUP
    Yellow, formerly known as YRC, is one of the nation's
largest so-called less-than-truck load carriers in the U.S. Its
customers include Walmart  WMT.N  and Home Depot  HD.N . 
    The company's bankruptcy filing potentially saddled U.S.
taxpayers with losses from a government rescue of the
long-troubled carrier. 
    Yellow said in its bankruptcy filing it had $2.15 billion in
assets and $2.59 billion in debt, and blamed its collapse on a
labor dispute with the Teamsters union. It terminated about
22,000 union-represented drivers when it went bankrupt. The
union has said the Nashville, Tennessee-based company
"mismanaged" its way to bankruptcy.
   Trucking firm Estes Express submitted a revised bid worth
$1.525 billion in cash for Yellow Corp's shipment centers,
topping a $1.5 billion bid from Old Dominion Freight Line
 ODFL.O . 
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Bankrupt trucking company Yellow eyes October sale of vehicle
fleet     urn:newsml:reuters.com:*:nL1N3AR1WP
Trucking firm Estes Express submits $1.3 bln bid for Yellow's
shipment centers     urn:newsml:reuters.com:*:nL1N39Y1QM
Trucking firm Yellow explores alternate bankruptcy loans   
 urn:newsml:reuters.com:*:nL1N39Q229
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Jarrett Renshaw in Philadelphia
Additional reporting by Dietrich Knauth in New York
Editing by Heather Timmons and Matthew Lewis)
 ((jarrett.renshaw@thomsonreuters.com; (646) 223-6193;))