Old Dominion Freight Line—and not less-than-truckload rival Estes Express Lines—will set the bidding floor for the sale of the more than 160 freight terminals of shuttered Yellow Corp., new court documents show. Thomasville, North Carolina-based Old Dominion is offering to pay $1.5 billion for Yellow’s network of terminals—topping the $1.3 billion bid Estes tendered earlier last week.
In an Aug. 18 filing in the U.S. Bankruptcy Court for the District of Delaware, attorneys representing Yellow detailed interim financing plans to help the defunct company wind down its business and identified Old Dominion as the so-called "stalking-horse" bidder for its real estate portfolio.
Old Dominion and Estes are neck-and-neck in terms of size. Old Dominion placed No. 10 list on the FleetOwner 500 of top for-hire fleets, and has more than 11,400 tractors and 46,000 trailers; Estes was No. 11. and operates around 9,600 tractors and 37,200 trailers.
The bidding also lends credence to the confidence expressed early this month by Yellow CEO Darren Hawkins that the Nashville-based company would be able to repay its creditors in full—including the U.S. government, which is owed nearly $740 million via a controversial pandemic-era CARES Act loan made by the Trump administration in 2020. The loan gave U.S. taxpayers a 30% stake in Yellow.
That both carriers’ C-suites have been willing bidders for Yellow’s real estate bodes well for creditors of the defunct, almost century-old, and former third-largest LTL in America.
The Old Dominion bid at a glance
The surprise bid by Old Dominion, which owns 256 terminals and has a presence in each of the lower 48 United States, will serve as a backstop for Yellow and calls for Old Dominion to put down a $75 million deposit and commit to its offer for at least 180 days. That timeline is in line with that of the other, short-term debtor-in-possession (DIP) financing that Yellow has negotiated and gives the company more time to find the most lucrative bids for its assets, either through a single transaction or a handful of smaller deals.
Word of Old Dominion’s offer to snap up Yellow’s real estate came about three weeks after President and CEO Marty Freeman and CFO Adam Satterfield discussed, albeit in roundabout and hypothetical terms, Yellow’s situation and its possible effects on the freight market as well as their own plans. Speaking to analysts on July 26 after reporting Old Dominion’s second-quarter results, Satterfield did, however, give a glimpse into the company’s real estate strategy that now sounds predictive.
“We’re always looking for opportunities, and that’s why we try to stay so far ahead of the growth curve,” Satterfield said at the time. “We generally are looking at each service center in each region and projecting out five years of potential growth to know where we’re going to have facilities that start hitting capacity. […] Sometimes, an opportunity presents itself [where today] maybe we don’t need this particular location. But in year four, for example, […] if it’s a good facility, then we would go ahead and take advantage of it.”
In an investor presentation issued between those remarks and its Aug. 18 bid for Yellow's terminals, the Old Dominion team pointed out that the company has, since 2012, grown its service center count by about 17%, while publicly traded peers have trimmed their collective network by more than 130 terminals, or by about 8%.
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