Yellow Freight’s assets have been sold-off to a market apparently eager for its assets.Thomas Cullen, Chief Analyst, reports.
Yellow Corporation, which owned Yellow Freight, declared itself bankrupt in August after numerous attempts to refinance the company including a major intervention by the US Federal Government. Fortunately for its creditors Yellow Corporation had extensive assets, notably logistics property. These are now in the process of being sold-off in order to pay the creditors.
The first types of property to be sold by the US Bankruptcy Court in Delaware has been the terminals and cross docks. It was always fairly obvious that these were amongst the most valuable possessions of Yellow Corporation, not least due to their locations in valuable freight markets across the US. Yellow Freight had a large market foot-print and this enabled it to develop an infrastructure that was expensive for rivals to duplicate. With the liquidation of the business, other road-freight companies are presented with the opportunity to enter these markets.
The most prominent purchaser in the sale was XPO, which is one of the US’ largest road freight providers and is especially strong in ‘less-than-trailer load’. It purchased 28 different properties, largely it appears cross-docks, costing a total of US$870m.
Other providers who bought similar properties included Estes Express Lines, paying $249m for 24 different locations, Knight-Swift Transportation that bought 13 terminals for $51m, Saia that bought 17 locations for $236m whilst the smaller TForce bought two properties for 15.9m. Overall 128 different properties were sold.
This first round of sales raised $1.9bn, however further sales of different types of assets are scheduled although they will probably raise less money.
Initially Estes Express Lines was amongst a number of bidders for Yellow Corporation before the liquidation process commenced. Although Estes Express failed, any purchase of Yellow Corporation out-right had considerable commercial logic judging by the prices its assets have achieved. Indeed, the automotive logistics company, Jack Cooper Transport made another recent attempt to buy Yellow Corporation. Whether Yellow Freight could have been successful on its own is unclear, however it seems likely that XPO will be considerably strengthened by the purchase if its balance-sheet can sustain it.
Author: Thomas Cullen
Source: Ti Insights
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