YRC Worldwide completes deal to reduce debt by $300 million
01/28/2014 9:27 AM
01/29/2014 12:25 AM
YRC Worldwide Inc. took the first steps Tuesday toward refinancing its debts following the Teamsters’ weekend approval of a revised labor contract.
The Overland Park-based trucking company said it completed a previously arranged deal with investors and lenders that reduces its debt by $300 million. Separately, Moody’s Investors Service said the company was working on two other measures covering $1.15 billion of debt.
YRC shares jumped $2.36, or 13.5 percent, and closed at $19.91.
Moody’s also said that it revised its outlook on the company to positive from negative following the union vote that makes the refinancing “very likely.” The rating agency said it expected to upgrade its ratings on YRC debt once all the transactions were complete.
Company and union officials had said failure to ratify the labor agreement would prevent the freight hauler from refinancing debts it could not repay and would potentially lead to bankruptcy.
YRC’s debt deal was initially announced Dec. 23, contingent on the union accepting an extended labor agreement.
The financing deal stalled when 61 percent of the International Brotherhood of Teamsters members voting rejected YRC’s original contract, which included new concessions. YRC and the union then negotiated revisions to the proposal, and it won approval from 66 percent of the Teamsters who voted.
“The investors have confirmed that the revised (labor agreement) is satisfactory under the terms of these existing agreements,” the company’s statement said.
The terms of the deal require YRC to issue new preferred and common stock worth $250 million and for holders of $50 million in debt to convert it to stock.
Moody’s said it expected YRC to refinance debts through two transactions, one involving $700 million and the other $450 million.
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