Teamsters Say Goldman Sachs Trades on YRC Bankruptcy

Teamsters Say Goldman Sachs Trades on YRC Bankruptcy

Teamsters General President James P. Hoffa accused investment bank Goldman Sachs of profiting from YRC Worldwide's woes by creating a market for derivatives that would profit from the trucking giant's bankrupty.

In a Dec. 16 letter to Goldman Sachs CEO Lloyd Blankfein, Hoffa called such trading "unconscionable," according to a story published by the Bloomberg news service reported. The derivatives in question are credit-default swaps on YRC and USF bonds.

Goldman Sachs denied the accusation. “Goldman does not have a position in the company, nor are we making markets in the company’s bonds or credit-default swaps,” a spokesman for the bank told Bloomberg.

The Teamsters union confirmed Bloomberg spoke to its officials about the letter but did not release the letter or comment further on its contents.

Hoffa's letter raised questions of whether the Teamsters union would use its political muscle in Washington to pressure Goldman Sachs or other investment banks it believes threaten YRC Worldwide. Goldman Sachs is trying to repay $10 billion in federal aid it received from the Troubled Asset Relief Program in order to get out from under restrictions President Obama placed on banks receiving TARP funds.

YRC Worldwide is struggling to complete a debt-for-equity exchange with its bondholders that would eliminate $536.8 million in debt and trigger long-term lending and liquidity agreements that would help the troubled carrier stave off bankruptcy.

Credit-default swaps on some of its bonds have become an obstacle to the exchange, as bondholders with CDS contracts may be recoup the value of their notes in a bankruptcy.

YRC Worldwide's stock offer required 95 percent of the bondholders to tender their notes, and as of yesterday 75 percent had agreed. The company today lowered the threshold to 70 percent for certain notes due in April and 85 percent for notes due in 2023.

Hoffa's complaint to Goldman Sachs underscores the Teamsters' stake in the company's survival. YRC Worldwide is the largest Teamster employer in the less-than-truckload segment of the trucking industry, with about 35,000 union employees.

The Teamsters earlier this year agreed to a 15 percent wage cut and an 18-month suspension of pension contributions by the company, and have urged other stakeholders, including banks, to match their efforts to keep the company out of bankruptcy.

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