Wednesday, December 30, 2009

YRCW: This Cat’s Got More Lives

Beleaguered transportation logistics firm YRC Worldwide, despite appearing to be on the ropes with its proposed debt-for-equity swap, and facing a possible bankruptcy, could still come out okay, according to a couple of analysts following the company.

David Silver of Wall Street Strategies and Lee Klaskow of Longbow Research both think the company will come up with a way to secure the support of bondholders who’ve not yet fully committed themselves to exchanging their notes for shares. Those hold-outs are believed to be looking to get more in a bankruptcy filing, on the order of 50 cents on the dollar versus what may amount to 20 cents on the dollar for the offer YRC is making.

It’s possible YRC may offer preferred shares or dividends to entice the remaining holdouts, says Silver in a phone interview this morning, without claiming any privileged knowledge of YRC’s intentions. Bondholders hoping to clean up in bankruptcy are somewhat naive, he believes. “The bankruptcies of General Motors and Chrysler this year were a turning point for bankruptcy in this country,” says Silver. “Courts have shown themselves to be very sympathetic to companies.” Full Story....

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