Dark Horse Bidder Makes Second Offer for Yellow Assets

Yellow trucks at a terminal in Hayward, Calif., Aug. (David Paul Morris/Bloomberg News)

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Next Century Logistics Inc. submitted a second bid for Yellow Corp. assets Dec. 7 after an initial offer to reanimate the bankrupt less-than-truckload carrier was turned down by the administrators of Yellow’s assets, according to sources.

The latest proposal by Next Century Logistics, led by Jack Cooper Transport Executive Chair Sarah Amico, is for 46 owned terminals and 147 leased terminals as well as Yellow rolling stock, sources close to the bid said Dec. 8.

Yellow owned around 12,700 tractors and 42,000 trailers at the end of the second quarter of 2023, according to company documents.

An initial going-concern bid from Next Century for all of Yellow was not viable and did not offer enough cash to abandon the ongoing sale of the hauler’s assets, lawyers for Yellow said in a letter.

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Nash 

That bid, submitted Nov. 28, also understated the cost of reanimating Yellow and overstated potential revenue and earnings after the company’s doors shut, which led to the likely permanent loss of customers, Kirkland & Ellis’ Patrick Nash said in the letter, a copy of which was obtained by Transport Topics.

Next Century Logistics’ initial bid offered $1.15 billion in cash and a further $1.5 billion in perpetual preferred stock, a type of debt equity that pays a 7% dividend, sources said. The $1.15 billion raised by Next Century Logistics would come from a unit of asset manager Brookfield, they said.

Up to 15,000 ex-employees of Yellow would have had an opportunity to join the revived company, with union representation. A number of C-suite and executive-level appointments also would have been available, the sources said.

Tenney Group Senior Vice President Eric Heath, a specialist in bankruptcy proceedings, told TT he had never seen a company of this scale reanimated in this way after seeking court protection.

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Heath 

Yellow’s lawyers saw a number of issues with Next Century Logistics’ initial plan after reviewing the proposal.

Some of the biggest problems, Nash wrote, included that the unsecured creditors committee had indicated no support for the bid. Also, calls on the U.S. Department of the Treasury to extend $740 million in loans have gone unheeded. Next Century wanted Treasury to extend the due date of the $740 million by two years through the end of September 2026.

Another wrinkle in the plan was that the bid also needed the Department of Labor to say it was not a so-called prohibited transaction under employee law, much like the agency did for the 2008 bailout of General Motors.

Treasury would be made whole for earlier loans extended to Yellow under a pandemic-era business rescue plan. Because of this, Heath noted a departure from the ongoing asset auction would be against the agency’s interests.

In the final paragraph of the letter, Nash told Amico and her team: “The debtors appreciate the time and efforts that went into preparing and submitting Next Century’s bid. However, Next Century’s bid as currently contemplated does not represent the best outcome for the debtors’ Chapter 11 cases nor the broadest recovery possible for their stakeholders.”

Court documents filed late Dec. 4 said 128 out of Yellow’s 169 owned terminals had been sold to 21 different buyers, while two leased terminals also found homes, in an auction that began Nov. 28.

Yellow is set to receive a combined $1.9 billion for the first terminals to be parceled off, the court documents show, with 46 owned properties still up for sale as well as 147 of Yellow’s 149 leased properties. Yellow’s rolling stock is also being auctioned off.

A Dec. 12 bankruptcy court hearing will decide whether to approve the first round of asset sales. Nash indicated in the letter that halting that sale process was not in Yellow’s interest and that the deals must be approved by the end of calendar year 2023 in order to preserve the value of the properties, among other things.

That court hearing would see Yellow’s terminals spread out among the carrier’s former LTL rivals. XPO Inc. agreed to pay $870 million for 26 owned terminals and two leased properties, emerging as the top bidder in the auction. Estes Express Lines landed the second-largest number of terminals in the auction, securing 24 owned terminals for a combined $248.72 million.

Greenwich, Conn.-based XPO ranks No. 4 on TT’s list of the largest LTL carriers in North America. Richmond, Va.-based Estes Express ranks No. 5 on the LTL list and submitted a $1.525 billion stalking horse bid for all the terminals in September.

At the time Yellow sought court protection from its creditors in August, the company ranked No. 3 on the TT LTL list.