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CEO focused on credit for trucker's customers
By Angela Greiling Keane
Bloomberg News
Published on Saturday, Oct 25, 2008
Shares of YRC Worldwide Inc., the biggest U.S. trucking company by sales, tumbled Friday to at least a 28-year low in Nasdaq trading after the company tapped $250 million under its credit agreement, the second such borrowing this month.
The money drawn Thursday will be used to retire debt, for working capital and to repay other loans, said Overland Park, Kan.-based YRC in a Securities and Exchange Commission filing.
The move comes after YRC's decision three weeks ago to access its revolving credit facility for $325 million to redeem notes due Dec. 1 and May 1. Prospects are increasing for YRC, parent of Roadway in Akron, to breach its debt covenants, said David Ross, a Stifel Nicolaus & Co. analyst, on Friday in a report before the filing.
''We will not increase our debt levels and we will not violate our covenant,'' Chief Executive Officer Bill Zollars told analysts Friday on a conference call. ''We're going to
look for lower-cost debt to swap out if we can do that, and other opportunities to de-lever the balance sheet.''
YRC shares dropped 68 cents, or 17 percent, to $3.27, the lowest price since at least 1982.
''We believe the worse the economy gets in the near-term, the greater chance YRC violates its covenants,'' wrote Ross, who recommends selling YRC stock.
Thursday's move is intended to keep YRC within its debt covenants and pay down at least $100 million in debt by the end of this quarter, Zollars said in an interview.
''We just want to make sure that we've got plenty of cushion with regard to our debt covenant,'' he said. ''It is important for our shareholders to know we've got an eye on that.''
YRC had $1.18 billion in outstanding debt as of Sept. 30, according to the regulatory filing.
The company has $150 million of borrowing capacity left in its revolving credit facility, Zollars said. YRC would have almost $400 million in untapped borrowing capacity after paying off the notes, the carrier said Oct. 3.
Zollars said he is worried about credit for the trucker's customers, which include retailers.
''We're really concerned about our customer base and their ability to access the financing to keep their businesses,'' he said. ''It's affecting volume because there are more bankruptcies occurring and even the customers staying in business are trying to find ways to reduce their shipping.''
YRC is already seeing those changes, including customers cutting back to four-days-a-week shipping from five, he said.
Shares of YRC Worldwide Inc., the biggest U.S. trucking company by sales, tumbled Friday to at least a 28-year low in Nasdaq trading after the company tapped $250 million under its credit agreement, the second such borrowing this month.
Get the full article here.
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Posted 07:15 AM, 10/25/2008
And Conway is hot on their tail with illeagal regulatory and no union as a watchdog over it. This is how Conway got where they are. They pay attention and follow only the rules of government regulation that result in low overhead and couldn't care less about the safety aspect of them. Again i say. It is not difficult to be successful if you can get people to work for nothing.