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PRESTON CORPORATION TO BE ACQUIRED BY YELLOW FREIGHT SYSTEM, INC. OF DELAWARE

 PRESTON, Md., Nov. 20 ~PRNewswire~ -- William B. Potter, chairman and president of Preston Corporation (NASDAQ: PTRK), announced today that Preston and Yellow Freight System, Inc. (NASDAQ-NMS: YELL) of Delaware had entered into an acquisition agreement providing for a $4.125 per share tender offer by Yellow for Preston's common stock and a merger of Preston and a newly formed subsidiary of Yellow.
 The agreement is subject to various conditions, including the requirement that at least two-thirds of the outstanding shares of Preston's common stock be tendered in the offer and that the transaction be approved by the Interstate Commerce Commission.
 Under the acquisition agreement, a subsidiary of Yellow will make a tender offer for all of the shares of common stock of Preston and, if the tender offer is consummated, the subsidiary will merge into Preston and the holders of the shares not tendered will be paid the same price. Concurrently with entering into the acquisition agreement, Preston effectuated interim credit arrangements with its principal bank and institutional creditors to provide for additional credit support during the pendency of the transaction, interim relief from certain financial covenant provisions and related arrangements concerning outstanding letters of credit. If the tender offer is completed, which is expected to occur no sooner than late January 1993 nor later than the end of march 1993, the debt governed by the interim credit arrangements with Preston's principal creditors will become due, and Yellow will cause the indebtedness to be paid and certain letters of credit to be replaced. It is estimated that the indebtedness to be paid by Yellow will be approximately $85 million in principal amount and that standby letters of credit of approximately $31 million will be replaced. Other Preston indebtedness (approximately $50 million in principal amount), including $27,750,000 principal amount of convertible subordinated debentures, will remain outstanding.
 Mr. Potter stated "The consummation of the Yellow tender offer will preserve the financial viability of Preston and provide a sound basis for effective operations, particularly at Preston Trucking Company, in the future. During the pendency of the transaction, the interim credit arrangements with lenders will permit Preston to operate effectively and continue its tradition of excellent customer service."
 Preston emphasized that the acquisition agreement and the interim credit arrangements are interdependent and each must remain in effect for the other to continue to be operative. Significant conditions, including the absence of further material adverse deterioration in Preston's business, must be satisfied in order that the transaction be consummated. While Preston believes that these conditions will be fulfilled, there can be no assurances that they will be.
 If failure to satisfy conditions of the acquisition agreement or the interim credit arrangements cause either or both to be terminated, in the absence of other revised arrangements with Preston's lenders or transactions with third parties, Preston expects that it would be in default of certain existing financial covenants by Nov. 30, 1992, to be unable to pay the principal and interest on its borrowings and to lack sufficient cash flow for operations by mid-December 1992.
 As announced on Nov. 9, 1992, Preston's consolidated operating performance in the current quarter to date continues to be disappointingly poor, continuing an adverse trend in the results of operations. As previously announced, the 1992 third quarter results were a consolidated loss of $1,049,000 ($.18 per share). The results for the month of October 1992 were a consolidated loss of $581,000. The results for both the third quarter of 1991 and the month of October 1991 were approximately break-even.
 -0- 11~20~92
 ~CONTACT: Bert Trucksess, vice president-finance of Preston Corp., 410-673-7151, ext. 351~
 (PTRK YELL)


CO: Preston Corporation; Yellow Freight System, Inc. ST: Maryland, Delaware IN: TNR SU: TNM

CK-TM -- NY060 -- 0086 11~20~92 18:46 PST
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Publication:PR Newswire
Date:Nov 20, 1992
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