well go bet in Nassau and ask them about Kevin McCaffrey.
Suffolk County, taking from Nassau's public employees
YRC Sees Interest Savings as Pivotal Union Vote Nears
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A driver at YRC Worldwide Inc. checks his trailer in Carlstadt, New Jersey.
Interest payments may be cut by $30 million to $50 million, from about $150 million a year now, after the refinancing is completed at the end of January, Chief Financial Officer Jamie Pierson said today in a telephone interview. He said talks with creditors are under way now to win lower interest rates.
“We’ve got tremendous momentum at our back,” Pierson said. “The interest-rate environment is incredibly favorable.”
Pierson outlined the savings goal after Overland Park, Kansas-based YRC disclosed a separate accord with creditors and some investors to chop debt by $300 million, buoying the stock. After YRC dodged bankruptcy twice since 2009 with help from investors and the Teamsters, the latest refinancing pivots on 26,000 union members voting by Jan. 8 to extend a contract that retains pay cuts and adds operating flexibility.
YRC amassed $1.4 billion in debt from acquisitions and what Chief Executive Officer James Welch has called “numerous missteps” before he took the job in 2011. Today’s debt accord calls for some creditors and other investors to buy $250 million of new shares at $15, YRC said in a statement. Bond owners will convert $50 million to stock in a price range of $15 to $16.01.
Shares Rally
YRC surged 22 percent to $18.25 at the close in New York. The shares have more than doubled from $6.76 at the beginning of the year.Pierson said the trucker’s potential interest savings will come from shrinking YRC’s debt load and negotiating reduced interest rates.
YRC now needs Teamsters-represented employees to vote in favor of extending a labor contract into 2019 that maintains a 15 percent wage cut and grants management new abilities such as subcontracting a limited amount of transportation services and cracking down on driver absenteeism.
In negotiations that began two years ago, creditors had sought the labor agreement before refinancing debt, while Teamsters leaders have insisted on concessions from bondholders.
Pierson said YRC had committed to the Teamsters to reduce debt by at least $218 million as it sought union backing for the contract extension, and delivered $300 million.
“We hit it out of the park,” he said.
The debt-reduction deal also depends on getting holders of at least 90 percent of $124 million of pension fund debt to extend the maturity to 2019 and reclassify the debt as unsecured from being secured by real estate assets, Pierson said.
YRC is rushing to complete the refinancing before a $69.4 million bond issue matures on Feb. 15. The company has $952 million of bonds and loans maturing by March 2015, according to data compiled by Bloomberg. As of Sept. 30, the company had about $170 million of cash.
To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net
To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net
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