- In addition to a raised offer, Estes Express Lines’ bid for Yellow Corp.’s terminals last week contained a sweetener: 30 days of free parking while the bankrupt LTL carrier’s equipment is sold and removed.
- The month of rent-free storage for rolling stock and other equipment, by Estes’ estimates, “could have a value to the Debtors’ estates in excess of $10 million,” according to a filing in a federal bankruptcy court in Delaware.
- Estes’ bid for the nearly 170 properties deems equipment removal a post-closing covenant, not a condition of closing. If the trucks and trailers were not removed in a month, Estes would be entitled to license fees beginning at 0.7% of the occupied properties’ purchase price, rising to 1% by the end of the fourth month.
Yellow’s equipment will be sold before its properties, with potential auctions for each to be held this fall.
Yellow’s rolling stock is scheduled to be sold at an Oct. 18 auction, if necessary. The real estate likely will be sold at a Nov. 28 auction, given the bidding war already underway.
Trucks, trailers and other equipment would be consolidated at agreed-upon terminals “to permit a timely and organized disposition,” according to Estes’ stalking horse agreement.
The 30 days of free parking at those facilities would begin after the real estate closing date “or such other period as the parties may agree,” the agreement said.
Free parking, as any driver or trucking executive knows, is no small consideration. Nor is more than $10 million in savings in an adversarial bankruptcy where it’s unlikely all unsecured creditors will be made whole.
But the license fees could become a lucrative aspect of the deal for Estes, depending on how quickly Yellow can offload its tens of thousands of owned trucks and trailers.
Beyond the escalating fees, which reach 0.8% of the occupied properties’ purchase price at the end of the second month, the deal requires Yellow to pay Estes all pro-rated real estate taxes for up to two more months.
Yellow would also be on the hook for legal expenses and other costs Estes incurs from disposing of any remaining equipment.