Update for Teamster YRCW Members Following Company’s Annual Report
YRCW released its annual report on March 14. Follow up news reports have focused on the news that the company missed a key “milestone” deadline. In the Teamsters’ opinion, the headlines exaggerate the significance of one small aspect of the restructuring process. To put it simply, this missed deadline has been greatly overstated and is not particularly significant to the overall restructuring process. Unfortunately, the union understands that YRCW’s competitors are trying to use this recent news to their advantage.
What the reports fail to note is that there is an outline of a restructuring in place that is moving forward. That outline of the restructuring was announced on February 28, in the form of an “Agreement in Principle” (AIP) agreed to by the company, the company’s lenders and the Teamsters National Freight Industry Negotiating Committee (“TNFINC”). That AIP was negotiated between these three parties with the knowledge that other key stakeholders, including the pension funds, would need to sign on before the definitive documentation date of April 29, 2011. The AIP and related credit agreements lay out several milestones, one of which was that a majority of the pension funds needed to approve the AIP by March 10. By that date, the pension funds provided their non-binding acceptance of all the terms of the AIP on March 10, except for one—the amount of the interest rate on deferred payments. Although the accelerated time frame did not permit the pension funds and other parties to resolve that issue prior to March 10, the union is optimistic that it will be resolved in the coming weeks as the parties work to document the restructuring transaction.
Unfortunately, even though the pension funds accepted virtually all aspects of the AIP prior to March 10, the inclusion of a few conditions (namely the interest rate) in their non-binding acceptance letter triggered a “milestone failure” under the agreement with the lenders. As a result of this technicality, the law required the company to make specific public disclosures in an annual report citing what could happen if a final agreement is not successfully completed between all the stakeholders. If members remember, YRCW has made similar statements during past restructuring events like the bond exchange in 2009 and shareholder votes in 2010. This kind of disclosure is not new.
Over the past two years all stakeholders have developed a track record of addressing challenging issues to get to this point. Teamster YRCW members have voted three times to sacrifice their hard earned wages and benefits in order to help the company survive. The members’ sacrifices have encouraged the lenders and other stakeholders (shareholders and bondholders in 2009 and 2010) to make significant concessions. For example, there have been approximately 20 amendments to the bank agreement during the past two years, prompting one analyst to write that he had never seen lenders be so accommodating for so long to keep a company out of bankruptcy. The pension funds during this same period have shown their support by approving seven amendments of their own.
Although more negotiations will follow in the next few months, the union will be working hard to reach a final agreement as it’s in the best interest of all stakeholders to restructure the company. We ask our members to not fall prey to the exaggerated headlines and to not let YRCW’s customers do so either.
Members may stay updated by visiting the “YRCW Freight Update” section of www.teamster.org.