YRC Gets Debt Reprieve

YRC Worldwide’s lenders waived a $45 million second quarter earnings requirement in a move one Wall Street analyst says is evidence banks aren’t interested in shutting down the troubled carrier – for now.

“We now don’t expect YRC to be in breach of its covenants until October 2009 at the earliest, and likely the (third quarter) covenant will be altered more friendly for YRC as well,” said analyst Ed Wolfe of Wolfe Research.

Wolfe also noted he doesn’t expect the less-than-truckload market to “improve materially until either YRCW is shut down or demand materially improves.”

YRC Chairman President and CEO William D. Zollars said that while volumes that were temporarily diverted to other carriers have started to return, it hasn’t been happening fast enough to avoid violating its covenants with lenders.

“As a result, we proactively worked through an amendment with our banks to remove any earnings (before interest, taxes, depreciation and amortization) targets in the second quarter. Our operational trends continue to improve and the loyalty of our customers remains strong, which gives us confidence in our earnings trends as we progress through the year.”

The company said its other financial covenants, including minimum cash requirements, remain in effect.

Contact John Gallagher at jgallagher@joc.com.