YRC Worldwide Inc. (YRCW) and Teamsters union leaders reached a revised labor accord that would pave the way for refinancing the trucking company’s $1.4 billion debt and staving off default. The shares surged.
Local union leaders will review details of the reworked agreement at a Jan. 21 meeting and will decide if the new proposal will be put to a vote, the Teamsters said in a statement today. Last week, union workers voted 61 percent against a proposal that would have saved YRC $100 million a year from concessions such as delayed raises and less vacation time.
“We worked hard to find alternatives to save this company and to protect the jobs of our members at YRC and its regional companies,” Teamsters General President Jim Hoffa said in the statement. The Overland Park, Kansas-based company confirmed the revised agreement in a separate statement.
YRC climbed as much as 23 percent to $19.42 in extended trading. The stock rose 2.3 percent to $15.82 at the close in New York.
The company has said an extension of the labor contract into 2019 with concessions is needed to persuade creditors to refinance its debt, including $325.5 million of loans due in September, that the company otherwise can’t pay. YRC said yesterday that it was holding talks with union leaders following the failed vote.
The new agreement has “a number of revisions” from the failed proposal to address Teamsters’ concerns, YRC said in its statement.
“The outcome of this week’s discussions is critical to the future of the company,” said Chief Executive Officer James Welch in a separate statement. The accord is “something our employees can have confidence is the best –- and only remaining –- path forward.”
The Teamsters leadership recognizes that YRC needs a labor contract extension to convince lenders to refinance its debt and allow the company to expand, said Tyson Johnson, director of the Teamsters national freight division, in the union’s statement.
“The market needs to understand that YRC’s front line workers are the lifeblood of the company and, while willing to play a role, will not shoulder the entire burden,” Johnson said.
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