YRC buys time, says lenders unanimously extend, reset loan terms
April 30, 2012
In a victory for new CEO James Welch, YRC said it reached agreements with its lenders to reset certain financial covenants over the life of millions of dollars worth of loans. In addition, YRC says lenders agreed to allow the carrier to retain all proceeds from the auction of certain surplus properties and terminals.
YRC added that new lending agreements were supported by all of its term credit agreement lenders and all of its ABL credit agreement lenders.
YRC has lost more than $2.6 billion in the last five years, more than any trucking company in history. But the lion’s share of those losses came under former Chairman and CEO William Zollars, who departed the company last December.
Welch, a former senior YRC executive who returned to the company when Zollars departed, has reinvigorated the company by concentrating on its LTL freight business, not ancillary operations. YRC controls nearly 12 percent of the $32 billion LTL sector between its YRC National long-haul and YRC Regional units.
Although the company was not profitable in the first quarter, its losses have narrowed sharply and YRC is now turning an operating profit, if not a net profit. At $4.4 billion in revenue, YRC is less than half the size it was just five years ago, but analysts say it is more sharply focused to take advantage of the recovery in the LTL sector.
“When YRCW’s new leadership team was put in place last year, we refocused the company on its core strengths to position the business as a respected industry leader in the North American less-than-truckload (LTL) shipping industry,” Welch said in a statement.
“The new leadership team developed a strategy and business plan, including updated forecasts focused on reinvesting in the quality of the service we provide, and we have successfully executed against both our qualitative and quantitative objectives,” Welch added.
Welch said that YRC has exceeded its internal forecasts and these new lending agreements will allow it to “continue building on our current momentum and successes.”
Welch added that YRC now has the financial flexibility needed to support its growth strategies and to continue gaining market share. YRC National is the third largest LTL carrier at just under $3 billion a year, while its Regional unit is ranked eighth largest with $1.45 billion in revenue, according to figures compiled by SJ Consulting.
“Thanks to the company’s talented and dedicated workforce, comprised of 32,000 of the best freight professionals in the industry, we are achieving operational improvements, increasing profitability and better serving our customers,” Welch concluded.
Jamie Pierson, YRC’s CFO, said the new lending amendments show that the banks supporting YRC “affirm their confidence in our ongoing initiatives, their trust in the leadership and the future of YRCW.
“Over the last several quarters—while strengthening our liquidity position and sharpening our focus on the North American LTL shipping market—we have announced the dispositions of our truckload subsidiary and a significant portion of our excess real estate as well as the divestiture of one of our Chinese joint ventures,” Pierson said.
“This agreement and unanimous support of all of our senior lenders is a testament not only to what we have done but also to what we are doing,” Pierson added. “Now, it is time to return this company to the prominence and pride that it once held as the most revered company in the industry.”
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