Core Viewpoint - FedEx Freight, the LTL spinoff of FedEx, will launch with a debt rating of BBB-, one notch lower than its parent company's BBB rating, indicating it is still within the investment-grade category [1][5]. Debt Ratings - S&P Global Ratings assigned a BBB- rating to FedEx Freight, while Moody's has rated FedEx at Baa2, equivalent to S&P's BBB rating. As of now, Moody's has not rated FedEx Freight's debt [1][2]. - XPO, a competitor, has lower ratings at Ba2 from Moody's and BB from S&P, both of which are non-investment grade, indicating FedEx Freight's stronger position in the market [2]. Financial Structure - FedEx Freight will have a significant debt load, including a $4.3 billion dividend payment to FedEx. It plans to issue a $600 million unsecured delayed draw term loan and has an estimated $3.7 billion in other unsecured debt for this payment [4]. - Additionally, FedEx Freight has secured a $1.2 billion revolving credit facility, which will not be utilized until the spinoff is finalized [4]. Spinoff Timeline and Outlook - The spinoff is scheduled for June 1, and the BBB- rating comes with a stable outlook, suggesting no immediate changes in rating are expected [5]. - S&P anticipates that FedEx Freight will maintain funds from operations (FFO) to debt above 20%, driven by increased average daily shipments and revenue growth [6]. Competitive Position - FedEx Freight boasts approximately 26,000 doors, the largest in the LTL industry, and covers about 98% of all U.S. zip codes, providing a competitive advantage over regional operators [7]. - In terms of revenue, FedEx Freight reported about $2.2 billion for the quarter ending November 30, significantly higher than Old Dominion's revenue of approximately $1.4 billion for the quarter ending September 30 [6].

Merger Announcement - Two leading suppliers of aftermarket parts for trucks, FleetPride and TruckPro, are merging to form a combined company branded under the FleetPride name, aiming to enhance customer value through improved parts availability, technical expertise, service, and ecommerce experience [1] - The merger is described as a combination of two similar and complementary businesses, serving both B2B and B2C customers with heavy-duty truck service and maintenance [1] Debt Situation - The merger follows a downgrade by Moody's, which cut FleetPride's corporate family rating to Caa1 and maintained a negative outlook, citing high leverage, low interest coverage, and weak liquidity due to negative free cash flow [2][3] - Moody's has since announced that the debt concerns have been resolved, as the problematic debt has been repaid, leading to the withdrawal of its rating on FleetPride [3] Ratings Comparison - S&P Global Ratings also withdrew its rating on FleetPride, assigning a B- rating to one series of outstanding debt, which is higher than Moody's Caa1 rating, indicating a stable outlook compared to Moody's negative outlook [4] Leadership Structure - Tom Greco, the former CEO of Advance Auto Parts, will lead the new combined company, while Chuck Broadus, the current president and CEO of TruckPro, will continue to manage TruckPro during the integration process [6] Financial Details - No sales price or combined value of the new entity was disclosed in the merger announcement, with both companies being owned by private equity firms: FleetPride by American Securities and TruckPro by Platinum Equity [5]