Banks Extend YRC Worldwide's Credit Line

YRC Worldwide's banking group came to the troubled carrier's rescue today, extending its credit agreement until Jan. 12 and effectively giving YRC another month to complete a debt-for-equity swap with bondholders key to its plans to avoid bankruptcy.

In their thirteenth amendment to the credit agreement since 2007, the banking group agreed to continue to let YRC draw up to $50 million at any time from its $950 million revolver reserve block, and it suspends a minimum cash requirement through Jan. 11.

That pushes off concern over a near-term bankruptcy filing by the carrier, which has lost more than $2 billion over the past two and a half years. The company detailed the credit amendment in a Dec. 16 filing with the Securities and Exchange Commission.

YRC is wrestling with reluctant bondholders as it struggles to complete a debt-for-equity swap that would wipe $536.8 million in debt from its books.

As of Dec. 15, 75 percent of the bondholders had agreed to the exchange, but the tender offer requires 95 percent of the note holders to swap their bonds for company stock.

The company extended the deadline for the deal a third time today, until midnight Dec. 17. Even if it fails to get 95 percent of the bondholders on board, YRC could renegotiate the terms of the tender offer or lower the participation requirement with the approval of two-thirds of its banking group, which is led by J.P. Morgan Chase & Co.

The debt-equity exchange would trigger new lending and liquidity agreements the banking group approved in October and is required by the Teamsters union.

"With the approval of the debt tender from the bank group, the added liquidity would carry YRC Worldwide into 2010," said R.W. Baird & Co. analyst Jon A. Langenfeld.

The swap "would result in increased liquidity, suspended interest payments related to bank debt and eliminated interest on tendered bonds" for YRC Worldwide, he said.

Contact William B. Cassidy at wcassidy@joc.com.