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YRC announces debt exchange offer that may reduce stakes
Published on Tuesday, Nov 03, 2009
Associated Press
NEW YORK: YRC Worldwide Inc. (Nasdaq: YRCW) shares plunged 64 percent Monday after the struggling trucker said it is launching a debt exchange offer that could drastically reduce current shareholders' stakes in the company.
The move is part of YRC's effort to get access to cash and avoid a bankruptcy filing, which has been the subject of speculation for months. The company has struggled to integrate two of it units and suffered through a dramatic falloff in freight demand amid the recession.
YRC runs trucks under the Yellow, Roadway, New Penn and Holland names, shipping everything from refrigerators to clothing across the U.S. through a huge network of terminals. Roadway operations are based in Akron.
Overland Park, Kan.-based YRC said it intends to launch an exchange offer of $536.8 million in 8.5 percent notes for common and preferred stock equal to 95 percent of its common shares, with a provision to give stock options to the company's union employees. YRC offered options equal to 15 percent of the company's common stock to union workers in exchange for wage and pension cuts earlier this year.
The trucking company had about $1.69 billion in liabilities, but only about $1 billion in assets as of Sept. 30. YRC has sold real estate, cut thousands of jobs and renegotiated terms of its debt to stay afloat. On Friday, the company said it lost $158.7 million, or $2.67 per share in the third quarter.
YRC fell $2.33, or 64 percent, to close at $1.32. It was the biggest drop since at least 1980, the earliest data Bloomberg News has compiled.
If the exchange is successful, it will allow the company to access $106 million in funds from a credit line reserve. It would also let the company begin to defer about $25 million in interest and fees currently owed to lenders and another $25 million per quarter in other fees related to a recently amended credit deal.
The company currently has access to $50 million of the funds from the reserve for certain operational purposes and will get the rest with a two-thirds approval from its lenders.
Seven board directors would resign in an exchange and new members would be elected, the company said in a regulatory filing today.
Get the full article here.
Comments
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barberton, oh
Posted 08:41 AM, 11/03/2009
i worked for Roadway ... yellow bought us 5 years ago and it has been a downward spiral due to poor management. i lost my job in march after 20 years;this company is a loser and shiested all original Roadway employees.... and yes, i am a "disgruntled EX-worker"
somewhere near you, US
Posted 09:43 AM, 11/03/2009
After years of damaging product far more than any other trucking company, we quit using them.
YRC is a failing business due to their own actions. Quit applying "The American Way" - blaming someone else for your troubles, to this joke of a company.
mogadore, oh
Posted 10:24 AM, 11/03/2009
I went through a merger back in 1987 (American Freight Systems/Smith Transfer) when the economy was in decent shape. We went under after 9 months. What a mess. Once the integration process starts (combining overlapping terminals)....look out...let the red ink fly!!!!
columbia, SC
Posted 01:50 PM, 11/03/2009
and so it begins...the sad, slow demise of one of Akron's most profitable companies...I used to work for Roadway Express and knew it was the beginning of the end when Yellow bought us out..they promised 5 years and five years it has been. I choose to remember the company the way it was...Roadway Express, Inc.
