By Thomas Black
YRC Worldwide Inc. rose after the trucking company said Thursday it resumed talks with the Teamsters union following workers’ rejection of a proposal last week for concessions needed to refinance debt and avoid bankruptcy.
The shares climbed 21 percent to $15.47, the biggest advance since Dec. 23. The Overland Park, Kan.-based company’s stock had dropped 32 percent through Wednesday from Jan. 8, the day before the union announced the vote results.
YRC was formed by the merger of Yellow Freight and Akron-based Roadway.
YRC said it’s discussing a reworked proposal that will satisfy creditors and workers.
Union members at the company had voted 61 percent to reject a contract extension that kept a 15 percent wage cut, delayed salary increases and reduced vacation time.
Investors and creditors had demanded an accord as a condition for refinancing $1.4 billion of debt.
“Although the company must achieve operational costs savings in the agreement, we also understand that simply re-voting the same proposal is not an option,” Chief Executive Officer James Welch said.
YRC has said an extension of the labor contract into 2019 is needed to persuade creditors to refinance its debt, including $325.5 million of loans due in September, that the company otherwise can’t pay.
The rejected labor proposal also called for operating flexibility, including the ability to hire third-party trucking services and a crackdown on absenteeism. That proposal would have reduced costs by $100 million a year, YRC said in a Jan. 10 filing, with more than half of the savings coming from delayed raises, less vacation time and benefits.
The Teamsters told the company it will not hold a second vote on the same proposal, the union said in a statement posted on its website.
YRC requested the new round of talks, the union said.
“We are willing to consider a modified proposal that would protect our members and enhance the company’s financial position,” the union said. “It must contain meaningful improvements over the last proposal.”
YRC amassed $1.4 billion in debt from acquisitions and what Welch called “numerous missteps” before he took the job in 2011. The company has posted profit losses of more than $3.1 billion since 2007, including a projected adjusted loss of $102 million last year.
As of Sept. 30, YRC had about $170 million of cash to face a $69.4 million bond issue that matures on Feb. 15.
Besides the loan that matures in September, the company has $556.7 million of loans and bonds maturing in March 2015.