The Ship is Listing, Customers are Fleeing but, Wait, You Have to See This Nifty Logo

Implications: YRC Worldwide, as part of its merging of long-haul LTL units Roadway and Express and Yellow Transportation, is rolling out a new logo that simply reads "YRC." It contains the familiar swamp holly orange color of Yellow and the royal blue that Roadway used. The former Yellow Corp. bought Roadway in 2003 for $1.1 billion to create YRC Worldwide, and is part of the reason YRC is now struggling under the weight of more than $2 billion in long-term debt.

Analysis: Maybe they should have just used a $$$ sign for a logo. It might be a constant reminder of why everybody is running all these trucks in the first place.

Financially ailing YRC Worldwide, in a stunning use of priorities, is rolling out a new logo "YRC" to help identify the former Yellow and Roadway companies on their trucks.

Now, maybe I should admit my prejudices right here. I am not a big fan of logos. Except for maybe the interlocking N and Y on the cap of the New York Yankees baseball team, all logos more or less look the same to me.

Of course, then again, I don't do marketing for a living. Greg Reid does. He is the "chief marketing officer" of YRC and he effuses in this story about the "heritage" brands of Yellow and Roadway.

All well and good. But this is a company that is dangerously close to bankruptcy, its workers are giving back 10 percent of their salaries to stay on the job, the company has lost more than 85 percent of stock value in a year and has posted losses in four of the last five operating quarters.

And they're worried about logos?

More from Reid: "A brand is not an identity. A brand is a promise, a promise in the market place. Visual identity is just one part of what makes up a successful brand."

So is making money, earning a successful return on investment for shareholders and serving one's customers.

Maybe I'm being too harsh here. But the job of combining the long-haul Teamster-covered networks of Roadway and Yellow is tough enough, and should require all of management's attention full time. A logo can be designed later, after the company is out of the financial woods.

And make no mistake: YRC is still in deep financial trouble.

Analyst Ed Wolfe of Wolfe Research has combed YRC's most recent 8-K filing with the SEC and finds YRC has many conditions placed on it not just for performance covenants but also to waive in case of a default or a late payment.

This temporary waiver expires on Feb. 17, and includes the reduction of YRC credit from $600 million to $500 million. The waivers also restrict YRC from executing asset sales of above $30 million, except for its previously announced $150 million pending sale/leaseback of some large terminals. The waivers also terminate if YRC incurs more than $30 million of additional indebtedness, makes any acquisitions, fails to deposit cash proceeds from any asset sale into an account maintained by the administrative agent under the credit agreement, according to Wolfe.

Wolfe wrote in a note to investors that he rates YRC has having a "high risk of some form of bankruptcy" within the next three months or so.

Let's hope the design team that did the nifty new logo is part of the secured creditors of YRC.

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.

YRC Worldwide will spend as much as $100M to buy back senior notes

YRC Worldwide Inc. will offer starting Tuesday to buy back senior debt for as much as $100 million in cash.

In a release after the market closed on Monday, the Overland Park, Kan.-based company said it will offer to buy back its 5 percent and 3.375 percent contingent convertible senior notes due in 2023 and its 8.5 percent senior notes due in 2010. The company said it had drawn on its senior credit facility to finance the purchases.

YRC said it expects to buy at least $230 million of the notes, which would reduce its debt by at least $130 million. To the extent the principal amount of the purchased notes exceeds the amount paid, the company said it will recognize the difference as a gain on extinguishment of debt and include it in the company’s earnings before interest, taxes, depreciation and amortization under the debt-to-EBITDA leverage ratio in the company’s credit agreement.

“This is another proactive measure that we are taking to reduce our debt and improve our earnings,” Chairman and CEO Bill Zollars said in the release. “Given the deteriorating economic environment, we have implemented a comprehensive program to improve our competitive position, increase our profitability and enhance our financial condition.”