| Item 1.01. | Entry into a Material Definitive Agreement. |
Debtor-in-Possession Credit Agreement
As previously disclosed, on August 6, 2023 (the “Petition Date”), Yellow Corporation (the “Company”) and certain of its direct and indirect subsidiaries (collectively, the “Company Parties”), filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the U. S. Bankruptcy Code in the U. S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 Cases are being jointly administered under the caption In re: Yellow Corporation, et al., Case No. 23-11069.
In connection with filing the Chapter 11 Cases, on August 18, 2023, the Bankruptcy Court entered an interim order (the “Interim DIP Order”) authorizing and approving the Company’s entry into (i) a superpriority junior secured debtor in possession multi-draw term loan facility (the “Junior DIP Credit Facility”) and (ii) a superpriority senior secured multi-draw term loan facility of Postpetition B-2 Loans (as defined below) (the “Postpetition B-2 Facility”). Capitalized terms used but not otherwise defined in this Current Report on Form 8-K have the meanings given to them in the DIP Term Sheet (as defined below) or the Interim DIP Order.
In accordance with the Interim DIP Order, on August 21, 2023, the Company Parties entered into that certain Debtor-in-Possession Term Sheet (the “DIP Term Sheet”), by and among the Company, as borrower, the DIP Guarantors (as defined therein), the financial institutions or other entities from time to time party thereto providing either the Junior DIP Credit Facility (the “Junior DIP Lenders”) or the Postpetition B-2 Facility (the “Postpetition B-2 Lenders”), and Alter Domus Products Corp., as administrative agent and collateral agent of both the Junior DIP Credit Facility and the Postpetition B-2 Facility, respectively. The DIP Term Sheet provides for: (i) new money term loans under the Junior DIP Credit Facility in an aggregate principal amount of $42.5 million, of which $17.9 million was drawn upon entry into the DIP Term Sheet and satisfaction of certain customary conditions precedent, and the remainder of which will be made available to be drawn upon achievement of certain milestones as set forth in the DIP Term Sheet (the loans to be made, the “Junior DIP Loans”); and (ii) new money term loans under the Postpetition B-2 Facility in an aggregate principal amount of $100 million, of which $42.1 million was drawn upon entry into the DIP Term Sheet (and satisfaction of certain customary conditions precedent), and the remainder of which will be made available to be drawn upon achievement of certain milestones as set forth in the DIP Term Sheet (the loans to be made, the “Postpetition B-2 Loans”, and together with the Junior DIP Loans, the “DIP Loans”). In addition, solely upon the request of the Company Parties, up to $70 million of additional term loans shall be made available by the Junior DIP Lenders, which (x) shall be fully junior and subordinated (including in right and payment) to the claims and liens of certain prepetition lenders, and (y) shall be made available to be drawn provided that prepetition senior secured claims outstanding shall not exceed at the time of such draw, in the aggregate, $1.435 billion.
Subject to the terms set forth in the DIP Term Sheet and Interim DIP Order, the Junior DIP Credit Facility shall be governed by, and based on and consistent with the credit agreement attached as Exhibit 1 to the Interim Order (I) Authorizing the Debtors to (A) Obtain Postpetition Financing, (B) Use Cash Collateral, and (C) Grant Liens and Superpriority Administrative Expense Claims, (II) Granting Adequate Protection to Certain Prepetition Secured Parties, (III) Modifying the Automatic Stay, (IV) Scheduling a Final Hearing, and (V) Granting Related Relief filed at docket number 302 in the Chapter 11 Cases except as otherwise set forth in the DIP Term Sheet or in the Interim DIP Order (the “DIP Credit Agreement”). The Postpetition B-2 Facility shall be governed by the B-2 Term Loan Credit Agreement in effect on the Petition Date, as superseded, supplemented and modified by the terms of the DIP Term Sheet and the Interim DIP Order, and all agreements, instruments and documents executed at any time in connection therewith, including the DIP Credit Agreement or any amendment to the B-2 Term Loan Credit Agreement.
Borrowings of the Junior DIP Loans under the DIP Term Sheet are superpriority junior secured obligations of the Company Parties, secured by superpriority junior secured liens on the Collateral. Borrowings of the Postpetition B-2 Loans under the DIP Term Sheet are superpriority senior secured obligations of the Company Parties, secured by superpriority senior secured liens on the Collateral and the B-2 Priority Collateral.
The maturity date of the Junior DIP Credit Facility and the Postpetition B-2 Facility, respectively, is February 17, 2024, subject to earlier termination upon the occurrence of certain events specified in the DIP Term Sheet, with the option to extend by the Junior DIP Lenders to May 17, 2024, with the consent of the Company Parties, subject to certain conditions being satisfied, including the repayment in full in cash of certain prepetition obligations.
