YRC The Worlds Largest Trucking Freightline Has Until Yearend To Avert Bankruptcy

Posted By on December 24, 2009

YRC Worldwide Inc  was the comination of Yellow Line Freight, Roadway and USF Corp.  They’re now the largest trucking freightline…….Uh, here is what Yellow Corp said back in 2005 with the purchase of USF Corp……………….OVERLAND PARK, Kan. & CHICAGO, Ill.  –This provides immediate and nationwide scale in next day and regional markets–Significant synergies and operational efficiencies expected–Cash and stock transaction expected to be accretive within twelve months–A transaction value of approximately $1.37 billion (based on the Yellow Roadway trailing 90-day closing stock price as of February 18, 2005). Yellow Roadway will also assume an expected $99 million in net USF debt, resulting in a total enterprise value of approximately $1.47 billion……….Yep, now look at the mess they built all on a mountain of debt.   Morons.

By Shannon D. Harrington and Pierre Paulden

Dec. 18 (Bloomberg) — YRC Worldwide Inc. has less than two weeks to persuade bondholders to accept a debt exchange and prevent a bankruptcy filing that its employees’ union says may force the biggest U.S. trucking company to liquidate.

YRC, which has pushed back the deadline for the swap three times this month, must complete the tender by Dec. 31 to avoid a $19 million payment of interest and fees that would leave the trucker in an “unsustainable” position, the Overland Park, Kansas-based company said yesterday in a regulatory filing.

Bonds and shares fell yesterday as the company, which posted more than $1.7 billion in losses in the past five quarters, said the percentage of creditors who agreed to the exchange fell to 57 percent from 75 percent on Dec. 15. YRC, facing a slump in freight demand, is locked in a struggle with a group of bondholders who own derivatives that would profit if the company defaults, people familiar with the situation say.

“Bondholders are in the driver’s seat,” said David Ross, a Baltimore-based analyst at Stifel Nicolaus & Co. who has a “sell” rating on the stock. “They could force the company to file if they don’t tender enough notes, and then there is a high chance the business is liquidated.”

YRC took on debt when Yellow Corp. acquired Roadway Corp. in 2003 for $1.07 billion and then bought USF Corp. in 2005 for $1.37 billion. The company has $1.6 billion of loans and bonds, according to data compiled by Bloomberg.

Chief Executive Officer Bill Zollars said during an earnings conference call on Oct. 30 that YRC wasn’t anticipating growth from the economy for the rest of this year, and at least the first half of 2010.

Concern is growing that the company wouldn’t survive a bankruptcy filing because customers would defect, said Iain Gold, a director in the strategic research department of the International Brotherhood of Teamsters, which represented about 40,000 YRC employees as of January.

“If you go into bankruptcy, or even just have a financial overhang that the company’s undergone recently, it’s tough to maintain customers when you’ve got competitors that are trying to underbid you on price,” Gold said.

YRC extended the deadline yesterday for the debt exchange offer to Dec. 23 and lowered the minimum participation rate for it to succeed to 80 percent from 95 percent, as the amount of bonds tendered declined. The company already postponed the exchange deadline on Dec. 9 and Dec. 16.

YRC’s $150 million of 8.5 percent notes due in April fell 1.25 cents on the dollar to 59.75 cents yesterday, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The shares declined 7 cents, or 6.8 percent, to 94 cents, after earlier rising as much as 15 percent, on the Nasdaq Stock Market.

The trucker must complete the exchange as part of agreements with its banks, the Teamsters and multi-employer pension funds, according to a Nov. 24 regulatory filing.

“YRC’s lenders have been more than accommodating,” Ross said. “The union workers have taken bigger wage and pension cuts than in the past. The issue is that they’ve had really poor senior management for many years, which made poor strategic decisions and overpaid for the acquisitions of Roadway and USF.”


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