YRCW extends credit amendment again
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Less-than-truckload (LTL) transportation services provider YRC Worldwide (YRCW) said that it has made amendments to its credit agreement and asset-backed securitization facility (ABS) in order to provide additional time to finalize plans to recapitalize its balance sheet.
This marks the 19th amendment to the company’s credit agreement. Company officials said that YRCW is also working with its lenders and the Teamster negotiating committee for the International Brotherhood of Teamsters (TNFINC) in order to get back on solid financial footing.
In November, YRCW ratified its labor agreement with the Teamsters for the third time, which is expected to result in an annual savings of $350 million through 2015. A key provision of that agreement is for the company to raise $300 million in new equity by December 31, 2010 and close the deal by March 31, 2011 (under these terms, YRCW is required to obtain a definitive agreement with an equity player, and failing that agreement require that lenders convert a portion of their debt to equity in order to keep their concessions in place).
YRCW said that the amended credit facilities extend the deferral of credit agreement interest and fees through mid-May 2011 and interest fees under the ABS facility through May 31. And the amendment requires the company to reach an agreement in principal to recapitalize its balance sheet by February 28, complete final documentation by March 15 and close by May 13, with the effectiveness of the credit agreement and ABS facility amendments subject to the consent of TNFINC and a supermajority agreement of the multi-employer pension funds party to the company’s contribution deferral agreement to an extension of the deferral of interest and principal payments under that agreement through May 31, 2011.
A Wall Street analyst said that this news does not significantly change anything regarding YRCW’s financial condition.
“Nothing about the company has significantly changed from this release, in our view, and no new CEO or equity investor ($300mm of new money required in the current restructuring plan) has been identified, leaving us still skeptical of this plan’s probability of success,” wrote Stifel Nicolaus analyst David Ross ina research note.
YRCW had a net loss of $62 million and $1.33 per share in the third quarter and has recorded losses in excess of $2 billion over the last 11 quarters, But the company has had four consecutive quarters of year-over-year improvement and six straight quarters of sequential improvement, following the integration of its Yellow and Roadway units in March 2009.
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