Saturday, December 27, 2008


Members Have More Time Due To Number of Requests, Change In Company Plan

Due to a high volume of ballot requests from affected members, the company’s change in plans to gain financial stability which eliminates a December 31, 2008 deadline, holiday mail volume and bad weather that shut airports, the Teamsters Union is extending voting on the YRCW modifications until Tuesday, January 6. Ballots will be picked up at the post office at 10 a.m. on January 6 and will be counted later that day.

The original timeline of December 31, 2008 agreed to jointly during negotiations, was extended after YRCW announced on December 24 it was cancelling its tender offer for certain outstanding bonds and is renegotiating its credit facilities. The company will not have to spend $150 million to purchase about $310 million worth of senior notes and will instead renegotiate the terms of its debt with its banks. The union believes this path offers a move viable long-term recovery plan.

YRCW said it was pursuing the new strategy in part because the Teamster membership had not yet ratified the contract modifications. The union was proceeding with ratification on the schedule that was jointly agreed to and dictated by the now-aborted tender offer. Since the company’s recent decision provides more flexibility, the union is extending the balloting deadline. The Teamsters Union is committed to ensuring that all affected members have the opportunity to vote and is encouraging members to participate in this decision that will affect their livelihoods and the livelihoods of their families.

Thursday, December 25, 2008

YRC Worldwide announces moves to ensure liquidity to survive downturn

As the economic road gets rougher, trucking giant YRC Worldwide on Wednesday announced maneuvers that chief executive officer Bill Zollars said would help it navigate through the difficulties.

The company said it had pulled a $150 million equity-for-debt tender offer for some of its notes after the Teamsters failed to approve a wage rollback by Tuesday’s deadline. YRC said it still expected the rollback to be approved by year’s end.

The Overland Park trucker said it was instead discussing with its lenders an amendment to its credit agreements that would improve its cash flow — an agreement expected to be in place by late January. The company also reported it had an agreement for a sales and leaseback of some facilities that would generate about $150 million in cash.

The nation’s largest trucker, employing more than 58,000, was recently forced to put up $1.5 billion in collateral after a debt-rating downgrade by Standard & Poor’s to CC, 10 grades below investment quality.

Investors reacted to Wednesday’s news by pushing YRC’s share price down nearly 20 percent, or 60 cents, to $2.64 in a shortened trading day. More than 4.3 million shares traded, compared with average trading of about 2.7 million.

“As we discussed the tender offer, it kind of became obvious that a better option for everybody would maybe be an amendment to the bank agreement rather than using cash to buy back bonds at a discount,” Zollars said Wednesday after the announcement.

“Because of the fact that we had been sharing our activities with the bank and our forecasts, we were able to move down the road to an amendment pretty effectively with the banks.”

Zollars said that the next three or four months would remain challenging as the economy continued to weaken. But through a number of efforts, he said, the company is building a “cushion” of cash to get it through until the second quarter, when the economy should begin to turn.

YRC reported it had more than $250 million in cash on hand but warned that if the Teamsters did not agree to reductions in its contract and it was unable to make other cash-generating changes, “the risk exists that the company would not have sufficient liquidity in 2009 to meet its operating needs.”

Zollars said such language was needed in a forward-looking statement to protect against the unexpected.

In early December, local union leaders reviewed and approved a proposal that called for about 40,000 YRC Worldwide drivers and dockworkers to take a 10 percent cut to help the struggling company. In exchange for concessions in pay, YRC would establish a trust that could give union members an equity stake in the company.

Officials had said they expected ballots to be counted by Dec. 30.

Under an “equal sacrifice” provision agreed to by YRC, non-union and management employees are also taking cuts in compensation.

Zollars said the wage rollback by the Teamsters would provide the company about $250 million in annual savings and the company would get an additional $100 million in savings from wage and benefit cuts to non-union employees.

He said YRC’s integration of its two biggest units, Yellow Transportation and Roadway, is expected to yield $200 million in annual savings.

He said the company also expected to do another sale and leaseback of facilities, such as the one announced Wednesday, that would generate about $200 million.

YRC reported it had a contract with NATMI Truck Terminals LLC to sell some of its facilities throughout the country for $150.4 million and to simultaneously lease them back for about $21.1 million annually. YRC said it could cancel the deal by Jan. 16 if it couldn’t get releases of existing mortgages by then. But it would have to pay NATMI a $750,000 breakup fee if it does.