By Thomas Black
YRC Worldwide Inc., the trucking company with Summit County operations that stumbled after an acquisition spree last decade, is asking union employees to accept new contract terms to support a debt refinancing.
“Some companies in our position have simply declared bankruptcy,” Chief Executive Officer James Welch wrote in an Oct. 30 letter to workers at the Overland Park, Kan.-based company. “We have all worked too hard and sacrificed too much to go that route and lose some of the industry’s best jobs.”
Lenders are demanding a renegotiated labor agreement as a condition for refinancing debt that matures starting next year, Welch wrote. He cited almost $1.4 billion in borrowings from “numerous missteps” at YRC before he became CEO in July 2011, and didn’t ask for any specific concessions.
YRC and the International Brotherhood of Teamsters were to meet Tuesday in Dallas at the company’s request to discuss the union’s contract, which expires in March 2015. The company has posted annual losses since 2007 and twice had to rework credit accords, in 2009 and 2011, to avoid bankruptcy.
Welch said YRC needs “a labor agreement with our Teamster employees that extends beyond our current expiration and any new debt maturities and increases our competitiveness before any refinancing can be completed.”
YRC’s cash goes toward paying interest and the company needs to start work now on refinancing, Welch wrote. YRC made more than $2 billion in acquisitions last decade, rising to become the biggest U.S. trucker before losing that title as sales slumped.
Suzanne Dawson, a spokeswoman for YRC at LAK Public Relations Inc., declined to comment on the letter.
Galen Munroe, a Teamsters spokesman, couldn’t be reached immediately for comment.
YRC has about 32,000 employees, a majority of them represented by the Teamsters, according to the company.
YRC has a market value of about $91.6 million. That contrasts with $2.3 billion at the end of 2007’s first quarter.
Shares closed up 28 percent in trading Tuesday to $10.84.
Its financial records show cash and “near-cash” items totaled $165.9 million at the end of the second quarter, according to data compiled by Bloomberg. The company is scheduled to report third-quarter results on Thursday.
YRC negotiated its current labor agreement in 2010 and reduced wages by 15 percent for most union employees to cut costs, according to a filing with the Securities and Exchange Commission. Those savings will need to be maintained to win any refinancing, said Brad Delco, an analyst with Stephens Inc. in Little Rock, Ark.