YRC had already been struggling with the freight downturn before COVID-19 hit.
 - Photo: YRC Worldwide

YRC had already been struggling with the freight downturn before COVID-19 hit.

Photo: YRC Worldwide

Less-than-truckload company YRC announced it is getting a $700 million loan under the CARES Act – while the U.S. Treasury gets a 29.6% equity stake in the company.

The company’s stock skyrocketed 75% on the news, after it had dropped 27% this year. Long-term competitive problems had taken the company's stock down 85% over the last five years, according to a report in CNN.

The loan is being made through the Coronavirus Aid, Relief and Economic Security (CARES) Act. But as CNN points out, The loan is not part of the federal CARES Act meant to help small businesses. Instead, it is meant to provide help to businesses critical to national security.

The Treasury Department said YRC is critical to maintaining national security – it provides 68% of LTL services to the U.S. Department of Defense.

Terms of the loan require YRC to maintain employment and limit executive compensation, dividends and share repurchases.

YRCW and its operating companies Holland, New Penn, Reddaway, and YRC Freight have been significantly impacted by the COVID-19 pandemic, according to a press release. These companies collectively employ 30,000 trucking professionals, including 24,000 Teamsters. 

The company had already been hit by the industrial slowdown last year, reporting in December that tonnage was down significantly compared to a year earlier.

The CARES Act assistance will be used to pay for deferred employee healthcare and pension costs and other contractual obligations, as well as to support essential capital investment.

“Our 30,000 employees have continued to serve hundreds of quarantined communities across the country during the pandemic, and this financial assistance will enable us to bridge this pandemic-related crisis and continue to provide essential shipping services for the nation’s supply chain,” said YRCW CEO Darren Hawkins. “The funding will also enable us to continue successfully implementing our multi-year strategic plan to transform our five powerful brands to operate as one company, one network, to better serve our customers and the nation’s supply chain as economic recovery takes hold.”

The loan matures on Sept. 30, 2024.

YRC’s existing credit facilities are expected to be amended to permit the new loan.

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