Yellow ‘Would Have No Freight to Haul’ if ‘Long-Shot’ Bid Succeeds
While Yellow Corp. received court approval Friday to hire auction houses to sell its trucks and trailers, a newcomer might be planning a bid to rescue the bankrupt trucking giant from liquidation and possibly save thousands of jobs.
Jack Cooper Transport, a Missouri fleet management company and auto hauler that ships new and used vehicles nationwide, is preparing a “long-shot” bid for Yellow, according to Reuters.
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This would throw an unexpected curveball into the sale process. Yellow has been trying to offload approximately 11,700 trucks and 34,800 trailers, along with roughly 170 terminals. It wants to sell the rolling stock and terminal assets in separate transactions.
Sourcing Journal reached out to Jack Cooper Transport for comment.
One supply chain academic is skeptical that Jack Cooper’s deal is possible given the schematics of Yellow’s initial wind-down process and customer exodus.
“I’m not seeing how this would be feasible, as all of Yellow’s freight has been reallocated to other less-than-truckload carriers,” said Jason Miller, interim chairperson, department of supply chain management at Michigan State University’s Eli Broad College of Business. “No shipper who tendered freight to Yellow and was then forced to shift it to another carrier (say XPO) is going to pull the freight back from XPO to tender it back to a revived Yellow. As such, even if there were some means to revive Yellow, it would have no freight to haul.”
As of March, Jack Cooper Transport operated 1,205 trucks and employed 1,092 drivers, according to Federal Motor Carrier Safety Administration data. In May, it gained approximately 240 more tractor-trailers when it acquired car haul trucking company Moore Transport.
But even with the recent acquisition, Jack Cooper is still much smaller than the typical less-than-truckload (LTL) players like XPO and others that already placed bids on Yellow’s terminals, like Estes Express Lines and Old Dominion.
The timing of this potential “going concern” bid from Jack Cooper Transport is intriguing. it comes shortly after U.S. lawmakers asked the Treasury Department to extend the maturity date for the $700 million Paycheck Protection Program (PPP) loan that Yellow obtained in 2020 in exchange for the government taking a nearly 30 percent stake in the company.
Eight senators claim that an extension would help Yellow attract a larger bid and save a portion of the 30,000 jobs that were lost, including 22,000 employees represented by the Teamsters. They made the formal request to consider the bid after the Teamsters called on Congress to reform modern bankruptcy regulations.
The union wants Congress to establish legal safeguards protecting earned pension credits and retirement benefits and ensuring workers get the severance they’re owed.
On Oct. 19, Sen. Roger Marshall (R-Kan.) sent a letter to Treasury Secretary Janet Yellen noting “interested parties” attempting the going concern bid, but did not name any potential bidders.
The PPP loans come due in September 2024, but Marshall and other senators including Bernie Sanders (I-Vt.) and Amy Klobuchar (D-Minn.) have called on Yellen to extend the loan to 2026.
According to the Reuters report, Jack Cooper’s bid effort hinges largely on whether the Treasury extends that payback period. A delay would mean the transportation company could offer more favorable terms for Yellow.
Jack Cooper officials, including executive chair Sarah Amico, have been talking with Biden administration officials in recent months to get support for extending the loan’s terms, the report said. Those discussions, which include the Teamsters, have ramped up in recent weeks, Reuters said.
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.
For the time being, Yellow is focusing on what it can control.
According to court filings, Yellow will now turn over the rolling stock auction to Nations Capital, Ritchie Bros. Auctioneers and IronPlanet Inc., which have agreed to take possession of the vehicles during the sale process.
Initially slated to take place Oct. 18, the auction was pushed back to an undetermined date. The deadline to bid for the Yellow’s terminals is Nov. 9, and the auction is scheduled for Nov. 28 if needed.
As of September, Yellow’s lawyers said roughly 540 potential buyers contacted the company asking about the trucks, trailers and property assets.
Yellow has said that its vehicles and equipment were appraised at a $900 million value, while the real estate was valued at nearly $1.1 billion. It has set $475 million to $800 million as the sales targets for the auctioneers related to the rolling stock.
