YRC’s $1.4 Billion Refinancing Bolstered by Teamsters’ Yes Vote - Businessweek
YRC’s $1.4 Billion Refinancing Bolstered by Teamsters’ Yes Vote - Businessweek
http://www.businessweek.com/news/2014-01-26/yrc-s-1-dot-4-billion-refinancing-bolstered-by-teamsters-yes-vote
Bloomberg News
YRC’s $1.4 Billion Refinancing Bolstered by Teamsters’ Yes Vote
YRC
Worldwide Inc. (YRCW:US) union
workers
agreed to more concessions in a second vote this month, clearing
the way for a $1.4 billion refinancing plan that helps the
trucking company ward off default.
Teamsters approved the four-year contract extension by 66
percent as balloting ended today, said Leigh Strope, a
spokeswoman for the union. The proposal maintains cuts of 15
percent in pay and 75 percent in pension contributions. Overland
Park, Kansas-based YRC also sought other givebacks, including
delays in raises and a reduction in vacation time, in a reworked
proposal after the first version was rejected earlier this
month. YRC said creditors and investors demanded the lengthening of the current labor accord to 2019 in exchange for $1.15 billion of lower-interest loans and new shares to pare $300 million of debt. Payments due in September can’t be made without new financing (YRCW:US), according to the money-losing trucker, which has said companies in similar straits have declared bankruptcy.
YRC amassed $1.4 billion in debt from acquisitions and what Chief Executive Officer James Welch called “numerous missteps” before he took the job in 2011. The company has posted losses of more than $3.1 billion since 2007, including a projected adjusted loss of $102 million for 2013, after bulking up with acquisitions that made it the biggest U.S. trucker by sales.
YRC rose 7.4 percent to $18.79 on Jan. 24. The shares have bounced along with YRC’s quest for givebacks, tumbling 29 percent in the week ended Jan. 10 after the initial vote on concessions and then soaring 38 percent over the next two weeks.
Past Deals
YRC has skirted default twice since 2009 with the help of creditors and worker-backed concessions.Those deals never produced the promised benefits. Revenue in 2013 probably totaled $4.84 billion, based on analyst estimates compiled by Bloomberg, or less than half the $9.92 billion peak in 2006.
Union members voted 61 percent against the first concessions package in results announced Jan. 9. YRC, which operates about 15,000 trucks daily, negotiated a second vote on a reworked accord that Welch called “the best -- and only remaining -- path forward.”
In December, the company reached an accord with some investors and creditors to reduce debt by $300 million through issuing $250 million of new shares and converting $50 million of bonds to shares. That agreement was contingent on the labor contract extension. YRC was planning to seek $1.15 billion of loans to refinance the remaining debt.
As of Sept. 30, YRC had about $170 million of cash to face a $69.4 million bond issue that matures on Feb. 15. The company has $325.5 million of loans due in September and $556.7 million of loans and bonds maturing in March 2015.
To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net
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