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Latest News - February 2011

February 28, 2011
TRC Falls After Reaching Deal With Union That Dilutes Equity
Source: Bloomberg
By: Mark Clothier

YRC Worldwide Inc. fell the most since September after the money-losing trucking company, some of its lenders and union employees agreed to a restructuring that may avoid bankruptcy by diluting shareholders.

YRC tumbled 74 cents, or 22 percent, to $2.68 at 4 p.m. in Nasdaq Stock Market composite trading, the biggest decline since September 30. The non-binding agreement improves YRC’s capital, boosts liquidity and creates “substantial dilution of existing equity holders,” the Overland Park, Kansas-based company said in a statement.

YRC, which has posted annual losses since 2006, took on debt last decade when it expanded through acquisitions. YRC, then called Yellow Corp., bought Roadway Corp. in 2003, and acquired USF Corp. in 2005. The company has suffered as lower- priced entrants took market share during the U.S. recession when demand for freight-hauling services declined.

“The success and viability of YRC is greatly enhanced by this announcement today,” John Lamar, YRC’s chief restructuring officer and lead director, said in an interview. Lamar declined to say how much capital YRC is raising or how many shares it plans to issue.

YRC said in the statement than it can’t provide assurances that it won’t be required "to implement the restructuring under the supervision of a bankruptcy court," which may change the terms.

The deal will provide “meaningful” equity ownership in the company for employees belonging to the Teamsters, the union said in a separate statement.

YRC said it expects to close the transaction by July and will further extend a deferral of interest and fees until then. In December, YRC had agreed to extend the payments until the middle of May. The December agreement had required YRC to agree to recapitalize its balance sheet by today. The company also said its lenders waived its first-quarter profit covenant.



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