Coach USA bankrupt but has three offers in place

Coach USA, the operator of Megabus and other commuter bus lines in the US and Canada, has filed for bankruptcy protection.

Coach USA, the largest privately-owned bus company in the US, was acquired by private equity firm Variant Equity Advisors for $270 million, mostly using debt that is still on the company’s books.

After what turned out to be an ill-timed 2019 private equity buyout, Coach USA quickly ran into trouble servicing its debt, as the COVID-19 pandemic caused bus ridership to decline by 90% from 2019 to 2020, according to documents filed in Wilmington, Delaware bankruptcy court.

While ridership levels have rebounded since the lows of 2020, they were only 45% of pre-pandemic levels in 2023, and Coach USA has faced higher interest rates and increased costs for basic needs like employee retention and fuel, Coach USA said in its court filings.

Coach USA CEO Derrick Waters said that buses will continue to run as normal during the company’s bankruptcy: “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,” he said in a statement.

Coach USA is $197.8 million in debt, including $37 million due on a pandemic relief loan and at least $134 million in other unpaid obligations, including trade debts.

Coach USA operates in 27 locations in the US and Canada, with 2,700 employees and 2,070 buses operating. The company operates several other bus brands in addition to Coach USA, including Megabus, Dillon’s Bus Company, and Go Van Galder.

Coach USA entered bankruptcy with three sale agreements in place, each of which is subject to higher and better offers. Those sale agreements cover 16 of Coach USA’s 25 business lines, and they would preserve jobs for about 2,100 Coach USA employees, according to court documents.

Renco Group, a private investment company, would acquire the majority of Coach USA’s assets in exchange for taking on $130 million of company debt and certain union contracts. Avalon Transportation would buy bus lines in Atlanta, Georgia and Western states, as well as specialized tour bus divisions operated by Coach USA, for $14.8 million, and ABC Buses would buy a fleet of 143 double-decker buses for $2.3 million, according to court documents.

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