Competing $1.5B Bid Emerges For Bankrupt Yellow's Truck Terminals

Old Dominion Freight Line has made a $1.5B bid for the bankrupt shipping company Yellow’s truck terminals, topping the $1.3B stalking horse bid made last week by Estes Express Lines.

The quick new bid signals interest in this rarely traded asset type and could spark a vigorous auction for Yellow's real estate, which includes more than 160 truck terminals. The auction will be supervised by the bankruptcy court.

The truck terminals represent sought-after sites close to major metros, which would be useful assets for trucking or logistics companies looking to facilitate quick deliveries, The Wall Street Journal reports. Other trucking companies and investors are reportedly interested in Yellow's assets as well.

Old Dominion is known as a “less-than-truckload” carrier, meaning it handles shipments for more than one customer in the same truck. Yellow was also an LTL carrier. Such companies consolidate smaller shipments from different customers into single loads, using a network of facilities to do so.

Yellow moved roughly $5B of freight each year, and its closure could have a rippling impact on freight capacity and costs nationwide ahead of the holiday season, when logistics demand will be high, Forbes reports.

After nearly 100 years in business, Yellow collapsed this summer, in part because of an unsustainable debt load, including a $700M pandemic-era loan from the federal government that the shipping company hasn't paid back.

The sale of assets will pay down much of the company's debt, including the funds owed directly to the federal government, but it isn't clear whether taxpayers will ever see anything for the 30% stake in the company that the government received as a condition of its $700M bailout loan. Share prices in Yellow collapsed to penny-stock territory ahead of its bankruptcy, and since then trading has been suspended.

Yellow's problems predated the pandemic, however, as it faced stiff competition and testy relations with its union, the International Brotherhood of Teamsters, which had called for a strike earlier this summer. That strike was narrowly averted just before the bankruptcy. After the bankruptcy, management and the union blamed each other for the debacle.

"Before the COVID-19 pandemic, Yellow was a financially struggling company that had a long-term non-investment grade [i.e., junk] rating and previous close calls with bankruptcy over the years,” a June Congressional Oversight Commission report said. “The pandemic did not cause Yellow's longstanding problems, nor is the Treasury's loan to the company likely to solve those problems.”

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