Logistics News: YRCW revises credit amendment
Jeff Berman, Group News Editor -- Logistics Management, 6/1/2009
Overland Park, Kan. — Overland Park, Kan.—After indicating in a recent 10-Q filing it may not meet its second quarter earnings before interest, taxes, depreciation and amortization (EBITDA) covenant of $45 million, YRC Worldwide reconfigured its amendment with its credit facility lenders.
Under the original agreement, YRCW was required to have a $45 million EBITDA in the second quarter that increased to a cumulative $130 million in the third quarter and $180 million by year-end. The new arrangement eliminates the second quarter EBITDA covenant, while its other financial covenants, including minimum liquidity comprised of cash and cash equivalents, restricted cash, and availability under the credit facilities, remain in effect.
When the EBITDA requirements were first announced, Tim Wicks, YRCW CFO, said they were an achievable threshold, citing how the company's Teamsters employees 10 percent and non-union compensation wage reductions and accelerating benefits of the Yellow Transportation and Roadway integration that went live in March would provide sufficient room for YRCW to remain in compliance with the amendment.
Since then, YRCW reported a $257.4 million first quarter loss, with tonnage at its national and regional units down about 29 and 22 percent, respectively. Part of its quarterly decline was attributed to $65 million in estimated costs for the Yellow-Roadway integration.
The 10-Q noted that many key YRCW operating metrics have improved since the integration went live. It said that from mid-April to early-May, YRC has experienced an increasing shipment trend, with customers returning shipping volumes, whereas prior to the completion of the integration it contended that many customers had reduced shipments with YRC to mitigate their risks from the integration. Other shippers, it said, reduced shipments due to uncertainties over the covenants in the credit agreement.
YRC National Transportation President Mike Smid told LM that during the first few weeks of the integration roll-out there were a few bumps in the road, but things began to stabilize in the late March, early April timeframe.
"We started to see significant week-over-week improvements in every category, including all our productivity measures," said Smid. "And as we got to the end of the second week of April, we really started to move—from a performance standpoint—beyond the historical performances of Yellow or Roadway both from a service perspective and an efficiency perspective."
LTL news: YRCW revises credit amendment
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