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Coach USA Initiates Voluntary Chapter 11 Sale Processes

June 12, 2024, 08:00 AM
Filed Under: Bankruptcy

Coach USA commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware to facilitate sale processes to preserve jobs, ensure continued service and maximize the value of its businesses. As part of the court-supervised sale processes, the company:

Entered an asset purchase agreement with an affiliate of The Renco Group, Inc., Bus Company Holdings US, LLC ("BCH US"), for certain of the company's bus lines – Dillon's, Elko, Megabus Retail, Montreal, Olympia, Trentway/Ontario (including Megabus Canada), Perfect Body, Rockland, Shortline (including Chenango Valley Bus Lines), Suburban, Van Galder and Wisconsin Coach – as well as certain assets of Community Coach. The existing Megabus intellectual property and retail operations will also be part of the transaction. U.S. Megabus operations will continue while the company pursues an ongoing transition to the existing partnership business model.

Entered asset purchase agreements with affiliates of AVALON Transportation, LLC, ("Avalon") for several of the company's bus lines: Lenzner, Kerrville, All West and ACL Atlanta.

Is continuing to pursue value-maximizing going concern sales for the company's remaining business segments and assets that are not included in these agreements.

Taken together, once completed, these proposed transactions will preserve thousands of jobs and ensure uninterrupted passenger transportation services to millions of passengers throughout the United States and Canada, many of whom rely on the Coach USA transportation network.

The company is operating as normal and remains focused on operating safely and serving customers in the United States and Canada.

Coach USA has proudly provided passengers and communities across North America with reliable and affordable transportation services for decades, including certain of its routes that date back more than a century. Following the COVID-19 pandemic, the company has faced significant challenges, as ridership and demand in the industry have remained well below pre-pandemic levels. Following a thorough evaluation of strategic options and with the support of its financial stakeholders, the company determined that initiating the court-supervised sale processes provides time and flexibility for the company to maximize the value of its assets and is the best path forward for its people, communities and customers.

Derrick Waters, Chief Executive Officer of Coach USA, said, "As we move through this process, our top priority remains safely carrying the millions of passengers who choose our buses each year and working closely with our valued contract customers and transportation agency partners. We appreciate the dedication of our employees to operating with safety as a priority and serving our customers and our communities."

The transactions are being undertaken pursuant to Section 363 of the U.S. Bankruptcy Code, with BCH US and Avalon serving as the "stalking horse" bidders for the businesses in the court-supervised sale processes. If other qualified bids are submitted during the court-supervised sale processes, the company will conduct an auction or auctions, with the stalking horse bidders setting the floors for the auction processes. Accordingly, the proposed transactions are subject to higher and better offers, among other conditions.

Coach USA has received a commitment for debtor-in-possession ("DIP") financing, which includes $20 million in new money. Following court approval, this DIP financing, combined with cash generated from the company's ongoing operations, is expected to support the business during the court-supervised process.

Coach USA has filed a number of customary motions with the Court seeking authorization to support its operations during the court-supervised process, including authority to pay wages and provide health and other employee benefits. The company expects to receive Court approval for these requests. The company intends to pay vendors and suppliers in full under normal terms for goods and services provided on or after the filing date.

Alston & Bird LLP is serving as the company's legal counsel, Houlihan Lokey, Inc. is serving as financial advisor, CR3 Partners, LLC is serving as restructuring advisor and Spencer M. Ware is serving as Chief Restructuring Officer.

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