08/02/2023 – 15:23
Trucking giant Yellow has ceased operations and is expected to file for bankruptcy after a series of mergers that left it even deeper in debt. During the pandemic, the company borrowed $700 million from the federal government, and the Treasury Department now owns about a 30% stake in Yellow. However, as a shareholder, the Treasury may have its participation eliminated and it depends on how much the company will collect from asset sales to pay off debts. According to some lawmakers and analysts, taxpayers could lose money.
A Yellow spokeswoman said the company expects to repay the loan in full, and the government has indicated no plans to provide further aid to Yellow, whose collapse could cause the loss of nearly 30,000 jobs systemically across the US. However, paying off older creditors could end up eating into the value of Yellow’s assets.
Yellow had about $1.5 billion in total long-term debt as of March 31, according to its most recent quarterly filing. To recover the first installment of the debt, the Treasury is third in line behind other creditors. Approximately $567 million was owed to a group of affiliates led by Apollo Global Management. Yellow also had a $500 million line of credit with a group of banks.
Paying off older creditors could end up eating into the value of Yellow’s assets. Selling assets after bankruptcy would help pay off these debts. Some of Yellow’s real estate can be especially valuable because many of its long-standing terminals are in desirable urban locations, have ample parking, and are configured for the specific type of transportation Yellow specializes in, known as a smaller truckload, from according to these people. Source: Dow Jones Newswires
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