YRC Worldwide Inc. intends to make its successful debt-for-equity swap official on Feb. 17.
That's when the struggling trucking company and parent of the former Roadway Corp. in Akron has scheduled a special shareholders meeting to consummate parts of its $470 million debt-for-equity exchange that bondholders approved on Dec. 31.
The move likely averted a bankruptcy filing for the Overland Park, Kan., company, which is the nation's largest trucker with about 35,000 employees, about 70 percent of whom are Teamsters.
At the special meeting, which will be held in YRC's corporate headquarters, shareholders will be asked to approve reducing what is called the par value of YRC stock, increase the amount of authorized shares and then approve a reverse stock split to reduce the number of common shares, according to YRC's proxy statement filed with the Securities and Exchange Commission. The proxy statement said YRC's board is not looking to take the company private.
The changes are not without risk, YRC said.
Among them, the company stock could be delisted from the Nasdaq exchange if the per-share price falls below $1, the company said. Share prices likely will fall because of the debt-for-equity swap, the company said.
In addition, YRC said it has a March 1 deadline to pay off $30 million in remaining debt or face additional pressure from lenders. YRC will need to secure financing to make the payment -- the company said it is prohibited from using operating cash to retire the notes. Some $15 million more of outstanding debt is due to mature by April 15 as well, YRC said.
The less-than-truckload company has been pummeled by the deep recession that drastically reduced freight shipments and prices YRC can charge, coupled with high levels of debt. In large part because of its finances, YRC said it also has lost business to competitors.
YRC has lost $1.7 billion in the past five quarters, and the swap removed nearly $500 million in debt from the company's balance sheet.
YRC needed to extend the swap deadline six times in December as bondholders held out.
The Teamsters lobbied the bondholders, some of whom would have profited if YRC defaulted, to make the exchange. Union members took 15 percent pay cuts -- YRC non-union employees had their pay cut by 10 percent -- and approved other changes to help YRC remain solvent.
In the debt-for-equity swap, bondholders became YRC's largest shareholder.
On Wednesday, shares closed at 88 cents. Shares are down 72.6 percent from a year ago.
Once the exchange offer is completed, as many as eight YRC directors will resign. Current directors will appoint the new directors to fill the vacant positions, who will serve until the next annual meeting.