Trucking company YRC Worldwide Inc. announced that ratings downgrades will require it to collateralize its real estate and revenue equipment, which it valued at $1.5 billion.
Standard & Poor's on Nov. 19 cut the debt rating of the company, based in Overland Park, Kan., by three notches, citing the company's ability to comply with terms of its borrowing because of declining profits.
The downgrade to "B" from "BB" was considered a trigger event under its credit agreement, requiring it to collateralize remaining unencumbered assets, mostly real estate and equipment, YRC said.
One-time fees of collateralization would be $7 million to $10 million, the company stated.
The carrier said it can still enter into sale and leaseback transactions, dispose of excess facilities and complete debt-for-debt exchanges.
The downgrade came after Moody's Investors Service lowered its ratings for YRC to "B1" from "Ba2," with a negative outlook. Moody's cited weakness in the company's regional operations and exposure to the troubled U.S. auto industry.