After securing a $400 million asset-based loan, the last remaining step is the sale of $100 million worth of convertible preferred securities to its lenders, a company official said. After that, the company plans to name a successor to retiring chairman, president and CEO William D. Zollars.
The $100 million securities sale should be completed on schedule, said John Lamar, YRC Worldwide’s chief restructuring officer and lead director. “With that being completed, all the key milestones will have been met, and we expect to have all of the pieces in place to close by July 22,” Lamar told The Journal of Commerce.
The company already received a $100 million boost from its lending group in the new $400 million asset-based loan, which replaces a $300 million asset-based credit agreement. “It has an increased size and increased advance rate,” Lamar said. “The overall impact is to increase the liquidity of the company so we can continue our growth plans as well as capital expenditures going forward.”
The $400 million loan agreement demonstrates lenders’ commitment to keeping YRC running through what looks to be a slowdown in the economic recovery.
The nation’s second-largest LTL operator has lost more than $2.7 billion since 2006, including $322 million in 2010 and $102 million in this year’s first quarter.
The company has narrowed its losses year-over-year significantly, but also lost more than half the revenue it had in 2006, when it was a $9.9 billion company. Three rounds of wage and benefit concessions from the Teamsters union and a $470 million debt-for-equity swap steered the company clear of bankruptcy in 2010.
The financial restructuring would see it through 2011 and lock labor and finance agreements in place that would lend YRC more financial stability through 2015.
The company has gained shippers and freight this year, but its operating costs also are rising. YRC in June resumed contributing to Teamsters employee pension plans.
The $400 million asset-based loan gives the company an additional buffer and will help it replace aging trucks and trailers. Lamar said YRC Worldwide would proceed with plans to spend $125 million to $150 million on new equipment this year.