by Qi Huang
Yellow Corp, a trucking and logistics company, filed for Chapter 11 protection on 6 August 2023 to sell off its assets after shuttering its operations. The company had its first day hearing on 9 August and though debtor-in-possession (DIP) financing was on the agenda, Yellow did not seek approval of the DIP at the hearing, instead revealing that it is in talks with two other potential lenders on a different DIP.
The current proposed DIP financing is from its term loan lenders, led by Apollo Global Management. The financing offers USD 142.5m in new money and a roll-up of USD 501.6m of its outstanding prepetition term loan. The DIP facility carries a 17% interest rate, a USD 7.1m fixed closing fee, and two 2.5% variable closing fees that would be enforced on the amount outstanding under the DIP facility on 8 September 2023 and 29 September 2023.
Two competing DIP proposals were raised during the first day hearing, with the first coming from the company’s largest individual equity holder MFN Partners, who offers the same interest but less in fees. The new money would be pari passu with the term loan debt. Estes Express Lines, another freight shipping company, also expressed willingness to provide the same DIP but junior to the existing term loan lenders.
Yellow will file the new or amended DIP proposal 10 August or 11 August, before returning to court at 10am ET on 11 August for a hearing on the financing.
The full report is available to download on the right.