Events Calendar
In This Section
Community campaign collecting donations for Haiti victims
Louisville man facing felony charge in tattooing of 1-year-old
Strickland says Ohio needs unpopular driver fees
Demjanjuk's attorney questions evidence
Worse weather elsewhere cancels Ohio flights
Quicken Loans Arena likely to restore water fountains
Winter storm warning downgraded to advisory
Most Read Stories
Man robbed at Tallmadge Avenue eatery
Four teens restrain man, take items from his Akron home
Police: Ohio girl dies after fall into snow bank
Complaints against officer keep coming
Another winter punch heading toward Ohio
Cuyahoga Falls residents come home to find burning couch on balcony
Kerrigan family disputes autopsy
Police: Man tries to buy crack with credit card
Man admits stealing TV from Akron home
Ohio man, 63, found dead in snow with shovel nearby
Blogs:
First Bell - On Education:
No City of Akron basketball tonight
Pets:
Pet telethon re-airs
The Heldenfiles:
Chipmunks "Squeakquel" on DVD/BD March 30
Akron Zips:
Late surge gives Zips ugly road win
Tribe Matters:
Blogmail response on Hafner
Cleveland Browns:
Stallworth's contract terminated
Balanced Ledger:
QB in Browns future: another mock draft
Kent State Sports:
KSU Notes – February 9
Cleveland Cavaliers:
NBA Power Rankings from Around the Internet
Buckeye Blogging:
Buckeyes grab 18 players on signing day
Varsity Letters:
Garfield at Buchtel basketball
All Da King's Men:
Palin At The Tea Party Convention
Blog of Mass Destruction:
Republican Pre-Conditions
Akron Law Café:
Citizens United v. F.E.C. (Part 4): Kennedy's and O'Connor's Basic Approaches to Constitutional Decisionmaking – Top Down and Bottom Up
Car Chase:
Collector Car Hobby Loses One of the Best—Jim Roll
Let's Talk Real Estate:
Decisions Decisions: Credit Cards or Your Mortgage?
Ohio Travels with Betty:
Loucile is looking for a Lake Erie getaway in June for three kids, ages 1, 3, and 5.
Sound Check:
Talk of the Town – Top entertainment picks for the weekend
HRLite House:
Track HR Research
Akron Gamer:
'Tecmo Bowl' recreation of Super Bowl XLIV
See Jane Style:
Do IT this week: Layering
By Jim Mackinnon
Beacon Journal staff writer
POSTED: 06:28 p.m. EDT, Aug 12, 2009
An industry analyst is raising strong doubts about whether trucking company YRC Worldwide Inc. (NASDAQ: YRCW) will be able to avoid bankruptcy, even with the latest labor contract concessions from its 35,000 Teamsters employees.
''Bankruptcy, in our view, is not imminent, but we do believe it is becoming increasingly likely,'' wrote transportation analyst David Ross of Baltimore-based Stifel Nicolaus. Other industry analysts have also said YRC could file for bankruptcy.
In the report issued Wednesday, Ross downgraded YRC shares from ''hold'' to ''sell,'' saying company stock is basically worthless. It is likely that the first quarter of 2010 — typically the industry's weakest time of the year — will be the company's last, he said.
Company employees now own ''35 percent of zero,'' Ross said in an interview.
Shares of YRC on Wednesday fell 25 cents to $2.05. Shares are down 28.6 percent since Jan. 1 and are down 89.5 percent from a year ago.
YRC executives have been saying that they are cutting costs and making other changes to improve company finances. Chief Executive Officer Bill Zollars called the Teamsters vote on the latest concessions ''game changing.''
The company issued a statement Wednesday in response to the analyst report:
''YRC Worldwide continues to report significant progress on its comprehensive plan to manage through the economic recession. Through the ongoing support of its key stakeholders including its lender group, union and non-union employees and pension funds, the company is moving forward with its strategic plans to restore financial strength and position its operating companies for future success.
''The recent announcement of the modified labor agreement for its employees represented by the International Brotherhood of Teamsters provides an immediate estimated savings of approximately $45 million per month in 2009, and the savings increase to $50 million per month in 2010.
''The company also recently announced further actions that can improve its liquidity by reaching an asset sale contract with North American Terminals Management Inc. for approximately $81 million. Sales and lease-back transactions are now expected to generate around $375 million of cash proceeds and excess property sales should generate over $100 million in 2009.
''The recent bank amendment which eliminates the third-quarter covenant and resets the [financial] covenants through 2010, provides YRC Worldwide additional flexibility to meet the needs of its customers. The company continues to work with its lenders to evaluate the need for long-term modifications to its credit agreements. In addition, the company is in discussions with groups of its bondholders to address the maturities of bonds next year,'' the company said.
Overland Park, Kan.-based YRC is the parent of the former Roadway in Akron. YRC remained one of Summit County's largest private employers in 2008 with about 2,000 people here.
Ross said he would not be surprised if YRC filed for bankruptcy in a day or in February — but it is likely the company has enough liquidity to make it through the end of the year. The company has been hurt by high levels of debt and the deep recession that has caused shipping volumes to drop dramatically.
''The company was over-levered and mismanaged from the top down,'' Ross said. ''I don't think the banks are going to give them any more money.''
Even if YRC survives through 2010, because there has never been a successful Chapter 11 bankruptcy filing in the less-than-truckload market that YRC operates in, Ross said the company likely faces liquidation.
''They go out. That's it. It's unfortunate for all the good people who work there,'' he said.
If there is a successful pre-packaged Chapter 11 bankruptcy that allows the company to reorganize and continue to operate, the debt holders would own the company, he said.
YRC and its competition will be fighting lower shipping volumes and tougher pricing in the third quarter, Ross said.
YRC's competitors in the less-than-truckload market can easily take up any slack created by YRC going out of business, Ross said. In economic downturns, less-than-truckload carriers ''beat each other up and the weakest don't survive,'' he said.
The latest 5 percent wage cut and halt on pension payments that YRC's Teamsters members approved last week will save the company an additional $5 million a month instead of the company's claims of as much as $50 million monthly, he said. The $50 million monthly figure factors in the savings YRC already had been getting by not making pension payments earlier this year, Ross said.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
An industry analyst is raising strong doubts about whether trucking company YRC Worldwide Inc. (NASDAQ: YRCW) will be able to avoid bankruptcy, even with the latest labor contract concessions from its 35,000 Teamsters employees.
''Bankruptcy, in our view, is not imminent, but we do believe it is becoming increasingly likely,'' wrote transportation analyst David Ross of Baltimore-based Stifel Nicolaus. Other industry analysts have also said YRC could file for bankruptcy.
In the report issued Wednesday, Ross downgraded YRC shares from ''hold'' to ''sell,'' saying company stock is basically worthless. It is likely that the first quarter of 2010 — typically the industry's weakest time of the year — will be the company's last, he said.
Company employees now own ''35 percent of zero,'' Ross said in an interview.
Shares of YRC on Wednesday fell 25 cents to $2.05. Shares are down 28.6 percent since Jan. 1 and are down 89.5 percent from a year ago.
YRC executives have been saying that they are cutting costs and making other changes to improve company finances. Chief Executive Officer Bill Zollars called the Teamsters vote on the latest concessions ''game changing.''
The company issued a statement Wednesday in response to the analyst report:
''YRC Worldwide continues to report significant progress on its comprehensive plan to manage through the economic recession. Through the ongoing support of its key stakeholders including its lender group, union and non-union employees and pension funds, the company is moving forward with its strategic plans to restore financial strength and position its operating companies for future success.
''The recent announcement of the modified labor agreement for its employees represented by the International Brotherhood of Teamsters provides an immediate estimated savings of approximately $45 million per month in 2009, and the savings increase to $50 million per month in 2010.
''The company also recently announced further actions that can improve its liquidity by reaching an asset sale contract with North American Terminals Management Inc. for approximately $81 million. Sales and lease-back transactions are now expected to generate around $375 million of cash proceeds and excess property sales should generate over $100 million in 2009.
''The recent bank amendment which eliminates the third-quarter covenant and resets the [financial] covenants through 2010, provides YRC Worldwide additional flexibility to meet the needs of its customers. The company continues to work with its lenders to evaluate the need for long-term modifications to its credit agreements. In addition, the company is in discussions with groups of its bondholders to address the maturities of bonds next year,'' the company said.
Overland Park, Kan.-based YRC is the parent of the former Roadway in Akron. YRC remained one of Summit County's largest private employers in 2008 with about 2,000 people here.
Ross said he would not be surprised if YRC filed for bankruptcy in a day or in February — but it is likely the company has enough liquidity to make it through the end of the year. The company has been hurt by high levels of debt and the deep recession that has caused shipping volumes to drop dramatically.
''The company was over-levered and mismanaged from the top down,'' Ross said. ''I don't think the banks are going to give them any more money.''
Even if YRC survives through 2010, because there has never been a successful Chapter 11 bankruptcy filing in the less-than-truckload market that YRC operates in, Ross said the company likely faces liquidation.
''They go out. That's it. It's unfortunate for all the good people who work there,'' he said.
If there is a successful pre-packaged Chapter 11 bankruptcy that allows the company to reorganize and continue to operate, the debt holders would own the company, he said.
YRC and its competition will be fighting lower shipping volumes and tougher pricing in the third quarter, Ross said.
YRC's competitors in the less-than-truckload market can easily take up any slack created by YRC going out of business, Ross said. In economic downturns, less-than-truckload carriers ''beat each other up and the weakest don't survive,'' he said.
The latest 5 percent wage cut and halt on pension payments that YRC's Teamsters members approved last week will save the company an additional $5 million a month instead of the company's claims of as much as $50 million monthly, he said. The $50 million monthly figure factors in the savings YRC already had been getting by not making pension payments earlier this year, Ross said.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
Comments
Click here to post your comments
uniontown, oh
Posted 06:59 PM, 08/12/2009
Before the merger Roadway was debt free. How can a company go from 100 to zero in such a short time. Man, what is going on. I don't think the unions can give uo much more. The drivers could work for $8.00 an hour and still not save this train wreck. Sure hope the company can get some of them Obama bucks.
Posted 09:28 PM, 08/12/2009
WoW! Where is this country going!
San Diego, CA
Posted 01:07 AM, 08/13/2009
Doesn't YRC also own the former USF compainies: Holland, Bestway, etc? Would all of these be going out of business? If YRC goes out, what's left...the freight divisions of UPS and FedEx?
This is unbelievable. Things sure have changed in the last 30 years...for those of us that remember the freight business before deregulation.
Posted 07:13 AM, 08/13/2009
Ward, A. Duie Pyle, Vyran, Conway, etc. LTL is a tough buisness to be in.
Kansas City, KS
Posted 09:15 AM, 08/13/2009
Citizen62 - What planet do you live on? Roadway was in debt up to their eyeballs - which was why Yellow was able to purchase them. They were the ones about to take bankruptcy.
As for this so-called analyst - he needs to lift his chin and get a reality check! Experts have proven reality is much less negative than most perceive. YRC has made huge strides towards profitability and all the employee-owners are sacrificing to help get us through this recession. David Ross, I can't wait to hear you LOUDLY eat crow after our first profitable quarter!
Posted 10:05 AM, 08/13/2009
Good Luck to you
Akron, OH
Posted 12:47 PM, 08/13/2009
If Dollar Bill and The Smidster have such faith in their "business plan", why haven't either of them (or any of the senior executives) bought any shares lately! You would think that when the stock dropped below a dollar a share, they would have purchased thousands of shares to show that they had faith in their own leadership? What gives?!
Hermitage, Pa
Posted 07:36 PM, 11/05/2009
Anybody could predict that Dollar Bill would not be able to get a huge merger together. How could Yellow and Roadway who were both profitable all of a sudden be losing money? Zollars had this grand idea that he could make Yellow into the biggest transportation entity in the world. If he was so smart, why didnt he immediately combine Roadway and Yellow's operations into one. Then sell off all the extra property, get rid of a staff of terminal personnel in the cities that Yellow and Roadway had dual operations, and layoff some drivers which he didnt need due to the efficiency of combining Yellow and Roadway? What a shame that so many employees had to take a pay cut and face inevitable job loss thanks to Mr. Zollars not guiding the ship. Where were the Board of Directors? Zollars should have been fired years ago. The company is being run by people not qualified to run a lemonade stand. You can bet that Zollars and his remaining thiefs are stripping any remaining dollars into their private accounts before the bankruptcy happens. As an ex employee of Yellow---I feel bad for the employees. As for Zollars and his cronies, they should be locked up ....
