YRC must repay $21.6M

A federal court has dealt YRC Worldwide Inc. a setback in its attempt to avoid making more than $21 million in debt payments next month.

In April, the Overland Park, Kan.-based trucking company asked for summary judgment against Deutsche Bank Trust Co.

Deutsche Bank is acting as trustee for bondholders that did not participate in last year’s debt-for-equity exchange, announced Dec. 31, which eliminated about a third of YRC’s total debt and gave bondholders a majority share of the company. YRC had said a bankruptcy filing was possible if the debt-for-equity swap didn’t succeed.

The bank claims that obligations for those bonds still are coming due Aug. 9, but YRC says the swap relieved it of those requirements.

In a securities filing Tuesday, YRC said the U.S. District Court for Kansas sided with the bank, saying the company could not eliminate its obligations without approval from those bondholders. The company said about $21.6 million in notes are outstanding.

YRC said it was considering its options, including appealing the decision. If it doesn’t, the company said it could make the debt payments with money raised through a $70 million private debt placement it agreed to in February.

The company said that it still is waiting for the debt placement to go through and that if it doesn’t receive the financing, it would have to use existing cash or seek additional third-party financing, which would require approval from its lenders.
“The company cannot assure you that it will have sufficient cash or that its senior lenders will grant their consent or whether the terms of any other financing will be favorable to the company or its stakeholders or that such financing can be obtained prior to Aug. 9,” YRC said in the filing.