Coach USA announced Tuesday that it plans to sell its assets and has filed for Chapter 11 bankruptcy protection.
The Paramus-based operator of Megabus, Coach Canada, Dilon’s Bus Co., Go Can Galder and other bus brands said that, as part of the court-supervised sale processes, the company:
- Entered an asset purchase agreement with an affiliate of the Renco Group Inc. Bus Co. Holdings US LLC for certain of the company’s bus lines 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 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 U.S. 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 U.S. and Canada.
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.
“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,” Derrick Waters, CEO of Coach USA, said.
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 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.
This new funding, combined with operational revenue, will allow the company to maintain its normal operations. The company also said it intends to pay vendors and suppliers in full.
The company will continue to operate as normal in both the U.S. and Canada during the sale.
Alston & Bird LLP is serving as the company’s legal counsel, Houlihan Lokey Inc. is serving as financial adviser, CR3 Partners LLC is serving as restructuring adviser and Spencer M. Ware is serving as chief restructuring officer.
