| Overland Park-based YRC Worldwide sees 'milestone failure' Wednesday, March 16, 2011 3:57 AM Source: The Kansas City Star (Kansas City, Missouri)) By Diane Stafford, The Kansas City Star, Mo. March 16--The possibility that YRC Worldwide Inc. might seek protection in bankruptcy court loomed larger this week, according to a statement in its annual report. In the report filed with the Securities and Exchange Commission, the trucking company noted that its lenders could declare the company in default under a credit agreement. Overland Park-based YRC has been working on a financial restructuring plan that has involved converting debt into ownership of the company. On Feb. 28, the company said it had reached a "major milestone" with more than two-thirds of its credit-agreement lenders and the Teamsters union's negotiating committee. The milestone was a nonbinding agreement in principle for YRC's restructuring that was expected to boost confidence in the freight-hauler. But YRC said a "milestone failure" occurred last week. "The required lenders have not indicated that they intend to declare an event of default under the credit agreement, and we are continuing to work with the parties," the annual report said. "We cannot provide any assurance that the required lenders will not declare an event of default under the credit agreement. If the required lenders declare an event of default under the credit agreement, we anticipate that we would seek protection under the U.S. Bankruptcy Code." In a memo to YRC employees, chief restructuring officer John Lamar said the multi-employer pension plans -- representing the majority of the deferred pension payments and interests -- had until March 10 to submit their nonbinding agreement in principle -- "which they did, except they indicated they will be seeking a higher interest rate on their deferred pension obligations." Lamar said that action wasn't acceptable to "certain of the credit agreement lenders and thus constituted a 'milestone failure' under the company's credit agreement." But, he said, the administrative agent for the lenders isn't recommending that the lenders declare a default, and the required lenders haven't indicated they intend to take such action. In his letter to employees, Lamar explained that the interest rate of the deferred pension note represents just one part of the restructuring effort. Since the recession reduced truckloads, YRC has struggled financially, particularly because of heavy debt. Employees, about 25,000 of whom are union members, have had layoffs and cuts in pay and benefits. The company has negotiated three rounds of concessions with the Teamsters. If the restructuring progresses as planned -- converting debt into ownership by the lenders and the Teamsters -- the expectation is for YRC to have a cash infusion in July. But if the lenders declare the company to be in default, YRC would be expected to repay millions of dollars in debt. YRC recorded a loss of $322 million in 2010, down from $622 million in 2009. YRC stock dropped 13.5 percent on Tuesday, closing at $2.05 a share, off 32 cents. To reach Diane Stafford, call 816-234-4359 or send e-mail to stafford@kcstar.com. ----- To see more of The Kansas City Star, or to subscribe to the newspaper, go to http://www.kansascity.com. Copyright (c) 2011, The Kansas City Star, Mo. Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com. NASDAQ:YRCW, A service of YellowBrix, Inc. http://www.istockanalyst.com/business/news/...-sees-milestone-failure |
Thread abonnieren
