YRC Worldwide's lenders agreed to reset financial covenants that underpin the company's restructuring to help the struggling trucking giant avoid bankruptcy.
The lending group, which owns a substantial stake in the $4.9 billion company, also will let YRC keep all proceeds from the sale of surplus terminals and properties.
The agreement will bring the financial targets set by YRC's lending agreements into line with a revised forecast released last fall by the less-than-truckload operator.
The fall forecast, prepared by the company's new management team, led by CEO James Welch, replaced an earlier forecast used as the basis for the restructuring plan.
"When you looked at the (original) forecast, they didn’t build any seasonality into it — the progress they forecast was all in a straight line," Welch said in an interview.
"The forecast we now have is still aggressive, but much more realistic," he said during an interview at YRC Worldwide headquarters in Overland Park, Kan., in February.
The lenders, led by JPMorgan Chase Bank, reset the covenant for YRC's minimum EBITDA, or earnings before interest, taxation, depreciation and amortization.
The minimum EBITDA covenant will be reduced 25 to 35 percent.
The banking group also consented to new limits for YRC's maximum total leverage ratio and minimum interest coverage ratio set by last July's restructuring agreement.
YRC Worldwide lost nearly $3 billion between 2006 and 2012, reporting a $354.4 million net loss in 2011 despite a 12.3 percent increase in revenue for the full year.
The agreement should help buy YRC Worldwide more time to stabilize its long-haul LTL subsidiary, YRC Freight, as its regional LTL carriers build up their profits.
YRC set off a storm of speculation on Wall Street and in the media earlier this year when it announced it would have to ask its lending group for more lenient terms.
Some press reports cited the company's appeal to its lenders as a sign of impending bankruptcy, and the credit default swap market bet heavily against the carrier.
However, the appeal was not really in doubt. YRC and its lenders have renegotiated covenant terms more than 20 times over three years of intense restructuring.
Last year's restructuring also gave YRC lenders a majority stake in the company. They now own 72.5 percent of all YRC stock. YRC Teamsters employees own 25 percent.