USA to Sell Megabus Canada Amid Bankruptcy Filing
Delaware, June 12, 2024 – Coach USA, the operator of Megabus and several other commuter bus lines in the U.S. and Canada, has filed for bankruptcy protection in Delaware. The company seeks to sell its assets and shed debt accumulated during an ill-timed 2019 private equity buyout by Variant Equity Advisors.
Acquired for $270 million USD, mostly through debt financing, Coach USA is now the largest privately owned bus company in the U.S. The company has announced plans to sell the majority of its bus lines, including Megabus Canada, to The Renco Group. This transaction will involve Renco assuming $130 million USD of Coach’s debt and certain union contracts. Additional assets will be sold to Avalon Transportation Inc.
Preserving Jobs and Services
Coach USA emphasized that these transactions will preserve thousands of jobs and ensure the continuation of passenger transportation services across the U.S. and Canada. The company operates in 27 locations, employing 2,700 staff and managing a fleet of 2,070 buses under brands like Dillon’s Bus Company and Go Van Galder.
Impact of the COVID-19 Pandemic
The bankruptcy filing revealed that Coach USA struggled with debt servicing due to the COVID-19 pandemic, which caused a 90% decline in bus ridership from 2019 to 2020. Although ridership has partially recovered, it remains at 45% of pre-pandemic levels as of 2023. Additionally, the company has faced higher interest rates and increased costs for employee retention and fuel.
CEO Derrick Waters assured that bus operations will continue as normal during the bankruptcy proceedings. “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,” Waters stated.
Coach USA entered Chapter 11 bankruptcy with $197.8 million USD in debt. This includes $37 million USD from a pandemic relief loan under the CARES Act and at least $134 million USD in other unpaid obligations, including trade debts. The company has three sale agreements in place, covering 16 of its 25 business lines, which are subject to higher and better offers. These agreements are expected to preserve jobs for approximately 2,100 employees.
The outcome of the bankruptcy and asset sale process will determine the future landscape of Coach USA’s operations and its impact on the transportation sector in North America. CBC News has reached out to The Renco Group for further information regarding the implications for Canadian travelers.
For more updates on Coach USA’s bankruptcy proceedings and its impact on commuter services, stay tuned.
