Immediate cost savings from modified agreement estimated at $45 million monthly, increases to $50 million monthly in 2010
Company signs additional asset sale contracts with NATMI for $81 million
YRC Worldwide Inc. announced today a major step forward in the company's comprehensive plan, with a majority of its employees represented by the International Brotherhood of Teamsters voting '"yes" to ratify a modified labor agreement.
"With the support of our employee-owners and other stakeholders, we continue making progress with our comprehensive recovery plan - realizing efficiencies from the YRC integration, restoring financial strength and positioning YRC Worldwide for future success," said Bill Zollars, Chairman, President and CEO of YRC Worldwide. "The contract changes enable us to reduce our cost structure, preserve capital and be more competitive in the marketplace."
The modified agreement includes a 5 percent incremental wage reduction and an 18-month cessation of union pension fund contributions, which will not require repayment. Related savings from the pension and wage reduction are approximately $45 million per month, and begin immediately. Savings increase to an estimated $50 million per month in 2010.
"Our union employees approached this situation in a very professional manner," said Mike Smid, President of YRC Inc. and Chief Operations Officer of YRC Worldwide. "This vote sends a clear message to our customers and our competitors. We are moving forward together, and we're moving forward with confidence, delivering uninterrupted and unparalleled service in our superior networks."
As with prior ratification elections, a small number of the bargaining units representing less than 10 percent of our Teamster employees did not yet ratify the labor agreement modifications. The company and the Teamsters expect to address employee concerns and have these smaller bargaining units reconsider the modifications in the near future.
Additional Asset Sales Contract Finalized
The company also announced progress on improving its liquidity position by executing contracts with NorthAmerican Terminals Management, Inc. ('NATMI') to sell and simultaneously lease back certain facilities, and to sell additional excess properties. The aggregate sales price is approximately $81 million and the property sales are intended to close during the third and fourth quarters of 2009. Sale and financing leaseback transactions are now expected to generate around $375 million of cash proceeds and excess property sales should generate over $100 million in 2009.
YRC Worldwide will continue to announce updates on its comprehensive plan as developments occur.