Carrier offers real estate as collateral in lieu of contributions
YRC Worldwide is looking to defer millions of dollars worth of payments into Teamster union pension funds to help prop up the company’s cash reserves as it struggles to improve its finances in the ailing economy.
In an April 13 filing with the Securities and Exchange Commission, YRC, along with USF Holland and New Penn Motor Express, said they are seeking an agreement with the Teamsters and YRC’s banks to use real estate as collateral to the multi-employer pension funds in lieu of making contributions.
“Depending on employment levels (which, in turn, are driven by freight levels and seasonal changes in those levels), the company makes multi-employer pension contributions of $34 million to $45 million per month,” according to the SEC filing.
An internal Teamster memo from Teamster Chairman James P. Hoffa to local unions participating in the National Master Freight Agreement said YRC management was seeking “several months” worth of payment deferrals from the pension funds.
YRC’s latest move to stay afloat in the brutal freight environment comes a week after management told Wall Street analysts that tonnage at its national and regional less-than-truckload operations declined 29 percent and 27 percent respectively, year-over-year in the first quarter.
“It’s certainly not a positive sign,” said David G. Ross of Stifel Nicolaus. “The only reason they would have to do this is that they don’t have the cash, and that means things aren’t good. They said they’re not buying any new equipment, they’ve cut wages 10 percent – anything they can get out of paying, they’re doing. They wouldn’t be thinking about deferring pensions if things were improving.”