YRC Worldwide Inc. announced today significant progress on its previously announced comprehensive plan to realize efficiencies from the YRC integration, restore financial strength, and position its operating companies for future success. The company's progress report includes updates on two key areas of its plan.
Teamsters to vote on contract modifications
YRC Worldwide announced today that its employees represented by the International Brotherhood of Teamsters ("IBT") will soon vote on modifying the company's current labor agreement. In addition to a five percent incremental wage reduction, the proposed modified agreement includes an 18 month cessation of union pension fund contributions, which will not require repayment at a later date.
"This is another step in our ongoing strategic plan to restore the financial strength of our company," said Bill Zollars, Chairman, President and CEO of YRC Worldwide. "Modifications to the labor agreement will help us reduce our cost structure, preserve operating capital and increase our competitiveness." In addition, YRC Worldwide is continuing discussions to address the structural inequities of multi-employer pension plans to determine a long-term solution. Zollars said, "We continue to have ongoing, productive dialogues with all our stakeholders, including the bondholders and pension funds."
The modifications would create an approximate $45 million per month savings, which begins immediately upon ratification, and grows to an approximate $50 million per month savings in 2010. In exchange, the Teamsters employees would receive options for 20 percent of the outstanding shares of YRC Worldwide stock, pending shareholder approval. This will allow them to further share in future company performance through stock price appreciation. YRC Worldwide also will appoint an additional member to its board of directors who is mutually agreed upon by the company and the negotiating committee. Additional details regarding the terms of the proposed contract modifications can be found in the current report filed today with the Securities and Exchange Commission.
Last year, non-union employees of YRC Worldwide began contributing to cost structure reductions at the same or a greater percentage of their total compensation as union employees. This includes modifications to the non-union pension, retirement and other benefit programs in addition to salary and wage reductions. "During this severe economic recession, I am gratified by the continued partnership, professionalism and commitment of our union and non-union employees to make personal sacrifices to achieve long-term success for our company and our customers," said Zollars.
Lender group support and discussions continue
Today the company announced that it finalized an amendment to its revolving credit facility with its lenders to extend the revolver reserve through July 31, 2009. During this extension, YRC Worldwide and its lenders will work collaboratively to reach agreement on options for longer-term modifications to its existing credit facilities. The revolver reserve was initially established in February 2009 to serve as a temporary reserve against the revolver capacity as the company sold real estate collateralized to the lenders.
Second quarter earnings scheduled
YRC Worldwide plans to release second quarter 2009 earnings after market close on Thursday, July 30, 2009