YRC Worldwide is turning to Wall Street for help reducing its massive debt as it works to achieve new long-term agreements with its Teamsters and lenders.
The troubled $4.9 billion trucking operator plans to sell up to 3 million shares of common stock on the open market, the company said in a Dec. 3 prospectus.
If the shares were to sell at $9.58 per share, the Dec. 2 closing price, YRC could raise $28.7 million.
The final amount raised by the transaction could be higher or lower than that estimate, depending on the stock price on the date of sale.
Money raised by the stock sale will be used to repay part of the $69.4 million in debt that matures Feb. 15, YRC told the U.S. Securities and Exchange Commission in a prospectus.
The holding company hopes to win a new multi-year contract from the Teamsters union that YRC’s lenders want in place before refinancing $1.36 billion in debt.
The stock offering could help YRC Worldwide meet at least some of its obligation if no new labor and financing agreements are in place by the Feb. 15 deadline.
YRC Worldwide's stock traded at $6.79 per share a year ago but surged to $35.79 in July before dropping over the fall to the $7-to-$10 a share range.
Issuing 3 million in new stock would dilute the value of existing shareholders’ stake in YRC Worldwide, which is struggling to recover from years of deep losses.
YRC hopes a new agreement with its lending group will reduce its debt load, spread payments out and lower interest rates that run as high as 11 or 12 percent.
“We’re paying almost $160 million a year in interest, and it’s hard to overcome that,” CEO James Welch said following a disappointing third-quarter earnings report.
The company’s interest expenses rose 28 percent year-over-year to $41.3 million in the third quarter, when YRC Worldwide reported a $44.1 million net loss.