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YRC Worldwide Reaches Agreement to Reduce Debt by $300 Million

December 23, 2013

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Christmas came a couple of days early for the parent of several less-than-truckload carriers, saying it has reached an agreement with certain holders of notes that will allow it to reduce debt by approximately $300 million.

YRC Worldwide says it will meet a primary requirement of retiring at least 90% of the company's Series A and B Convertible Notes, needed to satisfy the Teamsters Union’s condition of ratifying a new labor contract proposal that is currently out for ratification by the company's union employees.

The agreement, extending the current contract through March 2019, remains contingent on getting the proposed labor contract ratified by its members. Ballots have been sent to members and are due by Jan. 8, with results expected shortly afterwards.

In addition, the debt reduction deal is contingent on getting holders of at least 90% of the $124 million of the company's pension fund debt to amend and extend the currently outstanding note.

"The agreement is a momentous step toward delevering the company's balance sheet, significantly improving the company's credit profile, and is expected to secure some of the best paying jobs in the LTL industry," said James Welch, CEO of YRC Worldwide and President of YRC Freight. "The last two years have been a long and hard fought journey in turning around one of the largest trucking companies in America. After shedding a significant portion of our non-core assets and operations and with the help of our unionized and non-unionized employees, we have focused our attention back to what we do best, North American LTL trucking."

It remains uncertain if the 26,000 YRC Teamsters will approve the new labor contract, with published reports indicating the union has yet to recommend a yes or now vote on it and it is not popular with YRC Teamster employees.

YRC has been suffering from financial problems for several years with the Teamsters earlier making concessions to the company while it has come close to filing for bankruptcy more than once.

Under the agreement, the investors will invest $250 million in cash for newly-issued shares of common stock of YRC Worldwide at a price of $15.00 per share, according to a release from the company. The proceeds will be used to pay off the existing 6% Convertible Notes due February 2014 and/or pay off the existing Series A Convertible Notes due March 2015.

In addition, holders of approximately $50 million principal amount of the existing Series B Convertible Notes due March 2015 will convert those notes to common stock at a price of $15.00 to $16.01 per share, further reducing debt. The Series B Note holders that participate in the proposed transaction will also consent to amend the indenture to remove substantially all covenants and release the collateral securing those notes. The remaining Series B Convertible Notes may continue to be outstanding until their scheduled maturity of March 31, 2015. Consummation of the agreement is subject to a number of other customary conditions as well.

These transactions will result in a substantial reduction of our debt and will position the company to address impending maturities, including the 6% Convertible Notes due in February 2014," said Jamie Pierson, YRC Worldwide CFO. "These transactions also clear the way for us to enter the senior debt markets to refinance our current term and asset- based loans at more favorable interest rates."

Comments

  1. 1. C [ December 23, 2013 @ 01:22PM ]

    I have talked to a lot of good men and I didn't here the first one say yes..They my have count there chickens before they hatch.

  2. 2. B [ December 23, 2013 @ 02:18PM ]

    They should do this without extending our labor contract. We didn't finance the money at almost 12%. The company need to fix the problem alone. The employees have GIVEN ENOUGH!

  3. 3. Deron newman [ December 23, 2013 @ 03:32PM ]

    We already gave enough, and they still can't give us any answer to where the 3 billion dollars went in concessions. Not one penny accounted for! My vote is NO!

  4. 4. company greed [ December 24, 2013 @ 04:26PM ]

    THE COMPANY HAS ROBBED THE SENIOR MEN OF THEIR PAY VACATION BREAK TIME AND PENSION, now their going to screw our own children out of fair wages vacation, way to go yrc, way to screw the little ones!

 

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