Trucking company YRC Worldwide Inc. has lightened its financial load somewhat.
YRC, based in Overland Park, Kan., announced Monday it successfully renegotiated a 2011 loan after earnings fell below lenders’ minimum requirements.
YRC eased standards on leverage, earnings before some items and interest coverage for the life of the loans, the financially troubled less-than-truckload operator said in a filing with the Securities and Exchange Commission. The amendments were unanimously supported by senior lenders.
“Today, YRCW has the financial flexibility needed to support our growth strategies and to continue gaining market share,” said Chief Executive James Welch. “... We are achieving operational improvements, increasing profitability and better serving our customers.”
Shares of YRC rose 77 cents, or 11.8 percent, to $7.28 on Monday. Shares are down 27 percent since Jan. 1 and are down 98.8 percent from a year ago.
YRC was created in the aftermath of Yellow Corp.’s $1.1 billion purchase of Akron-based Roadway in 2003. That purchase and subsequent acquisitions saddled the company with substantial debt that nearly forced YRC into bankruptcy in recent years when the Great Recession hit and sales slowed.
“We appreciate the support of our lenders and believe that these amendments affirm their confidence in our ongoing initiatives, their trust in the leadership and the future of (YRC),” said Jamie Pierson, chief financial officer.
YRC avoided bankruptcy with credit accords in 2009 and 2011. The company projected in a Feb. 28 filing that it wouldn’t earn enough money to satisfy the July covenants and would have to renegotiate.
Lenders recognize that current management’s efforts “to put the company back in the leadership position in this space is exactly what needed to be done years ago,” Pierson said in a telephone interview. The company is in “constant communication” with lenders, he said.
“They support this, I think, in part and parcel, because we are executing on our commitment to them and know we will continue to do so,” he said.
YRC could have been forced to repay its loans immediately if it had been unable to reach an agreement with its lenders. A big problem, though: YRC in a February filing with the SEC said it did not have enough assets to repay the loans immediately if required to do so.
YRC will be allowed to keep revenue from some property sales, according to the filing. The trucker has posted annual losses since 2007 and shrunk to less than half its 2006 revenue by 2009 as competitors including FedEx Corp. and Con-way Inc. grabbed market share by lowering prices and drawing customers.
The July restructuring plan converted $1.03 billion of debt into a new loan, preferred stock and equity. The company increased liquidity from a new asset-backed lending facility.