LTL news: YRCW completes its long-awaited financial restructuring
September 19, 2011
The financial restructuring of less-than-truckload services provider YRC Worldwide (YRCW) appears to be complete based on news late last week noting that company shareholders unanimously voted to have YRCW common stock diluted, according to media reports.
This news follows a $500 million restructuring announced in July, which included a new $400 million lending agreement.
Before the restructuring, YRCW had 48 million outstanding shares. After the restructuring, it has 1.9 billion shares, meaning former shareholders will own just 2.5 percent of YRC. The other 97.5 percent is now owned by new shareholders comprised of lenders, bondholders, and labor union members, according to Reuters.
The restructuring included a radical 1-9 reverse stock split which means a new set of shareholders will own the company, with former shareholders’ value sharply diluted. Existing stockholders will now own just 2.5 percent of the company under this new deal.
In the second quarter of this year, YRCW reported a net loss of $39 million on $1.257 billion revenue, compared to a net loss of $10 million on $1.119 billion revenue in the second quarter of 2010, which included an $83 million after-tax benefit.
Following this news on Friday, shares of YRCW dropped nearly 70 percent to 10 cents per share.
With this restructuring now complete, YRCW is focused on the future and regaining market share it has lost over the last four years.
CEO James Welch, whom replaced Bill Zollars earlier this year, told the Kansas City Star that over the last eight weeks the company’s on-time delivery rates have increased to 94 percent from 88 percent.
When the restructuring was first announced in July, YRCW officials said it would enhance the company’s liquidity and provide a “runway for the continued growth in revenues and earnings.”
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