YRC Chief Welch Says Trucker Can Service Debt as Swaps Rise
YRC Worldwide Inc. (YRCW), the trucker whose credit-default swaps surged as bondholders guard against losses, said it can service its debt as long as business continues improving.
“Our customers are telling us a different side of the story versus what some of the analysts may say, or some of these CDS folks,” Chief Executive Officer James Welch said in an interview. “Our business is growing. We’ve had double-digit growth.”
YRC has won some new customers after losing market share during a 2009 restructuring that helped prevent bankruptcy, Welch said in an interview with Kathleen Hays and Vonnie Quinn on “The Hays Advantage.” Revenue climbed 12 percent last year after falling every year since 2006 as the money-losing trucker struggled to integrate companies it purchased in 2003 and 2005.
Credit-default swaps tied to the Overland Park, Kansas- based company surged to the highest since October 2009 this week before paring some of the gains. Yesterday’s price implies a 91 percent chance of default, according to data provider CMA.
The 10 percent notes due March 2015 dropped to 34.5 cents on the dollar as of March 26 from 72 cents in September, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Chief Financial Officer Jamie Pierson said last month that YRC expects to reset debt agreements so it can pay lenders, after the company projected in its annual regulatory filing that it wouldn’t be able to satisfy requirements beginning this quarter. Pierson said that forecast was from the company’s previous management team.
YRC tumbled 11 percent to $5.11 at the close in New York today.
The company can service its debt “provided that we get the businesses to operate better than they have been,” Welch said. “And we are certainly doing that. The regional carriers are definitely operating better.”
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