Wednesday, July 08, 2009

YRC offers update on turnaround efforts

YRC Worldwide Inc. has been consulting with turnaround firms and financial advisers to help it come up with a plan for weathering the recession.

The Overland Park-based trucking company late Wednesday offered an update about its work to position itself to ride out the economic downturn. The release followed a trading day in which YRC stock prices plunged 28 percent to a 52-week low of 89 cents, compared with a previous low of $1.20. Also Wednesday, an analyst said bankruptcy remains likely for YRC in the near to midterm.

Several months ago, YRC said, it retained financial advisers that include Tenex Capital Management, Alvarez & Marsal and Rothschild Inc. to help form a “comprehensive strategic plan to address its capital structure and liquidity needs.” As part of that, Rothschild has started preliminary talks with several parties that hold significant portions of YRC’s debt securities.

Labor agreement negotiations with the International Brotherhood of Teamsters union are continuing and “remain productive,” the release said. The talks reportedly center around YRC ending its participation in union pension plans for 14 months, which would yield about $500 million in savings.

YRC also detailed other progress it has made in recent months, including integrating its Yellow and Roadway networks into YRC to cut costs, a bank agreement amendment that let YRC use $73 million in escrow funds from asset sales to pay down its revolving credit facility and progress on agreements to defer pension fund payments using company real estate as collateral. YRC reached an agreement to defer $83 million in second-quarter pension contribution payments with the largest pension fund in June; since then, seven other funds have entered the same agreement, bringing deferral of another $11 million in payments. YRC, which contributes to 36 multiemployer pension plans, still is in talks with the remaining funds.

“We can’t control the economic environment, but we certainly can and are controlling our response to it,” YRC Chairman and CEO Bill Zollars said in the release. “Our self-help recovery plan is proactive and has the support of our stakeholders. We are taking the steps needed to manage our plan today, and position our company for success as the economy recovers.”

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