Amid an ongoing war with the Teamsters union and dire monetary conditions, the Congressional Oversight Committee (COC) released its latest report on Yellow Corporation’s $700 million national security loan from the Treasury Decomponent that is part of COVID-19 relief funds. The COC created through the Coronavirus Aid, Relief, and Economic Security (CARES) Act and is tasked with overseeing how the Treasury and Federal Reserve Board of Governors use the taxpayer express budget to achieve some economic stability in the wake of the COVID-19 pandemic.
Yellow (CCJ Top 250, No. 6), which operated as YRC Worldwide at the time, won the loan because it designated it as a “company imperative to maintaining national security” due to its relationships with the Department of Defense. The loan was obtained in exchange for a nearly 30% stake in YRC through the U. S. government. U. S.
The COC said it expressed its considerations on the loan in a report dated July 20, 2020, just weeks after the loan was announced.
“This report raised considerations about Treasury’s resolve to treat Yellow as a critical enterprise to the maintenance of national security and the procedure for succeeding in that conclusion,” the COC said in its latest report. “The Commission pointed out that it is far from transparent. that the fourth largest LTL transportation company in the United States is critical to maintaining national defense, as it would deliver ‘food, electronics, and other materials to military sites across the country. ‘”
The COC added that the report also raised concerns about the threat of the loan due to Yellow’s poor monetary situation even before the pandemic began, noting that the company had been “a poor investment for more than a decade before the COVID-19 pandemic, there were currency difficulties for years before the pandemic, and the threat of bankruptcy before obtaining a loan from the Treasury.
[Related: Yellow Files $137 Million Lawsuit Against Teamsters Union]
Yellow, when asked last year about the loan, did not deny using the CARES budget to make equity investments and insisted they were entirely adequate and consistent with the company’s negotiations with the Treasury.
A yellow spokesperson told the JCC on Thursday that its CARES Act loan “has broad bipartisanship in Congress, complete from the International Brotherhood of Teamsters (IBT), approval from the Department of Defense and has been legal through the U. S. Treasury. “U. S. In addition, in returning for the loan, the U. S. Treasury will not be able to do so. The U. S. government took a significant stake in Yellow, making it Yellow’s largest shareholder and creditor.
Yellow’s inventory was trading at around $3 in July 2020 when it took out the loan. Yellow’s inventory closed Wednesday at 80 cents in percentage.
The company added that the loan allowed it to “continue critical pick-up and delivery operations at the height of the pandemic,” allowing 30,000 workers to keep their jobs and benefits.
The spokesperson also said that at the time the loan was granted, Yellow was in the process of implementing its One Yellow strategy to achieve efficiency, speed, selection and price for its customers. “Yellow’s modernization strategy, known as One Yellow, was aimed at enabling the company to better compete with its most competitive, effective and therefore active non-union carriers,” the spokesperson added.
In addition, One Yellow’s expected savings and synergies, the spokesperson said, “will allow Yellow to refinance its debt and fully repay the CARES Act loan in September 2024, when it matures,” adding that through the end of the first quarter of 2023, the company had made interest payments to the Treasury totaling $56. 8 million. “Yellow’s CARES Act loan is and remains secured through Yellow’s finishing assets, adding real estate and rolling stock. As the company’s control said in the past, it completely finishes repaying the CARES Act loan. “
The COC said in its latest report this week that it found Yellow spent millions of dollars between 2009 and 2020 pushing for a national security loan.
The COC report also describes how stakeholders, executives and the Yellow Teamsters Union benefited from the Treasury loan.
In its recommendations, the COC said Yellow “was not indispensable for the maintenance of national security, given that the shipment it supplies to the military can only be provided through other trucking companies. “
The committee that Congress, in the case of some other loan program in response to long-term emergencies, “clearly defines the term ‘business essential to the maintenance of national security'” and prevents the executive branch from having unlimited authority to designate a company as such. The COC also calls Congress to restrict any national security loan program to businesses “in good financial shape prior to the emergency events that led to the creation of the program. “
Finally, the commission recommends that the Treasury try to get rid of its yellow shares to minimize the threat to taxpayers. and interest on Treasury debt in Yellow is of little price if the Treasury continues to hold it. 2024, and (b) its $700 million loan to Yellow prior to September 30 of the loan, maturing in 2024. ‘
[Related: Trump, Teamsters, Yellow Corporation ask for $700 million loan]