YRC stock drops after it taps credit line to pay off notes

YRC Worldwide Inc. borrowed $325 million from its senior revolving credit facility to pay down debt that carries higher interest rates.

In a filing Friday with the Securities and Exchange Commission, the Overland Park-based company said the $325 million, which the company borrowed Thursday, has an interest rate of roughly 5.2 percent. The debt the company will pay off — $225 million at 8.25 percent interest and $100 million at 6.5 percent interest — is due in December and May, respectively.

Around 3 p.m. Friday, YRC’s stock was trading at $7.74, down $2.17, or 22 percent, on volume of 5.4 million shares, according to Yahoo Finance. The stock traded Friday as low as $7.44, down 25 percent. The stock’s average daily volume the past three months is about 2 million shares.

In a release, YRC Chairman and CEO Bill Zollars said the “unrest in the credit markets” prompted it to pay the higher-interest debts early.

“Our current financial condition is solid, and with no further note maturities until 2010, we are well-positioned to weather this economic environment,” Zollars said in the release.

YRC said it has nearly $400 million available through its credit facilities.

In an internal memo to employees, Zollars said the refinancing will enable it to accelerate the integration of Yellow and Roadway.

YRC said in the SEC filing that its Yellow Transportation Inc. and Roadway Express Inc. subsidiaries officially merged into Yellow Roadway Corp. on Wednesday. YRC said it plans to change the name Yellow Roadway Corp. to YRC Inc.