Subscribe to our free, weekly email newsletter!


YRCW says in 10-K filing that company restructuring plan misses a key objective

By Staff
March 15, 2011

The long-term financial health outlook for less-than-truckload transportation services provider YRC Worldwide (YRCW) remains cloudy based on details in a 10-K annual report filed with the Securities and Exchange Commission yesterday.

This report follows a February 28 announcement made by YRCW in which the company said it had reached an agreement in principle with key stakeholders for a comprehensive restructuring plan. This agreement was the 20th amendment to YRCW’s credit agreement and was made in the form of a non-binding term sheet and approved by the parties necessary to satisfy the agreement in principle condition in the company’s credit agreement. These parties include the Teamsters National Freight Industry Negotiating Committee and a more than two-thirds majority of the lenders under the company’s credit agreement.

In the 10-K, YRCW said a “milestone failure” had occurred, because its Pension Fund Condition in its most recent credit agreement was not reached by its March 10 deadline. This deadline required a nonbinding agreement among YRCW and its key stakeholders on the terms and conditions of the company’s Pension Fund Contribution.

“A Milestone Failure has occurred because the Pension Fund Condition was not satisfied by the required date, and, as a result, the Required Lenders have the right, but not the obligation, to declare an event of default under the Credit Agreement,” stated the 10-K.

YRCW added that it believes the Milestone Failure occurred because the majority Pension Fund holders were seeking a higher increase in the interest rate payable on the Pension Note related to the company’s restructuring agreement. And they said that the company cannot provide assurance that its Required Lenders will not declare an event of default under the Credit Agreement, and if the Required Lenders declare an event of default under the Credit Agreement, YRCW said it anticipates it would seek protection under the U.S. Bankruptcy Code.

A report in the Kansas City Business Journal stated that YRCW has deferred more than $139 million in pension payments and has negotiated three rounds of concessions with the Teamsters, which represents about 25,000 YRCW employees, going back to mid-2009. During this time, YRCW Teamsters have accepted reductions in pay and waived monthly contributions to employee pensions.

A research note by Robert W. Baird analyst Jon Langenfeld said that YRCW’s “fate remains in the hands of creditors,” adding that “doubt regarding YRCW’s ability to remain a going concern will likely unsettle certain vendors.”

In its fourth quarter earnings call earlier this year, YRCW reported net income of $23.1 million—of $0.49 per share. This falls short of the fourth quarter of 2009, when YRCW reported net income of $119.5 million, which included a $177 million after-tax gain on debt redemption.  Despite the quarterly gain in net income, YRCW reported a net loss of $322 million and $8.13 per share for all of 2010.

The fourth quarter marked the fifth consecutive quarter of year-over-year earnings improvement, according to YRCW. And its consolidated results included positive EBITDA for the third straight quarter and positive operating cash flow for the second half of 2010.

“We are encouraged with the continued year-over-year improvement in our operating performance, as we remain focused on our three key initiatives: disciplined pricing, customer mix management, and cost improvement, said YRCW Chairman, President, and CEO Bill Zollars on an earnings conference call in February

Zollars also said that YRCW is in active discussions, regarding the company’s balance sheet recapitalization. 

For related articles, please click here.

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Jacksonville, Fla.-based Florida East Coast Railway (FECR), a 351-mile freight rail system on the state’s east coast, recently made two separate announcements. One had to do with an expansion of intermodal services between Charlotte, N.C. and various locations in South Florida and another was related to the company boosting its intermodal capacity through the addition of new equipment.

The International Air Transport Association (IATA) announced August 2014 data for global air freight markets showing continued “robust”growth in air cargo volumes.

Even though some of its key metrics dropped sequentially from August to September, the outlook for manufacturing over all remains strong, according to the most recent edition of the Manufacturing Report on Business issued today by the Institute for Supply Management (ISM).

Company officials said that these planned changes, which will take effect on January 4, 2015, will provide for increases in current pay rates and reduce the time it takes for its nearly 15,000 drivers to reach top pay scale.

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA