$9.2-Million Cash Deal : Anaheim’s Taylor Bus Sells Most of Its Assets

Beleaguered Taylor Bus Service of Anaheim has sold most of its assets and school bus service contracts to transportation giant Ryder System of Miami for $9.2 million in cash, Ryder officials said Friday.

For Ryder, the acquisition was “a move to expand its student transportation operations in the California market,” according to a prepared statement. Ryder officials could not be reached for comment.

For Taylor, the sale enabled the company to pay off about two-thirds of its $14.5 million in secured debt. The firm filed last May for protection from creditors under Chapter 11 of the federal bankruptcy code.

“What remains of Taylor is an operation that will basically be selling off the remaining buses that were not sold to Ryder,” said Larry Casey, consultant to Taylor’s bankruptcy trustee. “We are not operating any buses now. There are approximately 700 left to be sold.”

Bought 385 Buses

According to the statement, Ryder bought 385 buses and more than 30 Taylor contracts to provide school bus service to various California school districts, primarily in the Los Angeles and Sacramento areas.

The Taylor purchase is in keeping with Ryder’s corporate behavior over the past three or four years, said one analyst, a period in which Ryder has been expanding its fairly new school bus business.

“It (school bus operation) is a business they’re new in, but they’ve done very well,” said Paul R. Schlesinger, vice president with Donaldson Lufkin & Jenrette in New York.

Ryder’s Student Transportation Services Group provides school bus services in 15 states and operates more than 6,300 vehicles.

Although Taylor had provided partial bus service for more than 100 California school districts in 1987, by the time the sale was completed on Aug. 26, the number of contracts changing hands was reduced to just over 30.

Trouble Over Insurance

The company’s troubles began early in 1986, when the Los Angeles Unified School District decided that Taylor failed to provide adequate insurance. The district bought independent coverage for $260,000 and billed Taylor.

Soon afterward, the state Department of Insurance began investigating whether Taylor had adequate liability coverage.

Later that year, Taylor lost its $15-million contract to provide services for the huge Los Angeles school district. In addition, the firm also lost contracts to serve the San Diego and San Jose school districts.

The company has filed a $15-million administrative claim against the Los Angeles district, a claim that represents the value of the contracts canceled by the district.