YRC Worldwide Inc., the U.S. trucker that averted bankruptcy in 2011, is seeking $1.15 billion in loans to refinance debt, according to a person with knowledge of the transaction.
Credit Suisse Group AG is leading the deal, which includes a $700 million term loan and a $450 million asset-backed portion, both due in five years, said the person, who asked not to be identified without authorization to speak publicly. The bank will host a lender meeting for Overland Park, Kansas-based YRC on Jan. 9 at 2 p.m. in New York to discuss the financing, the person said.
The new borrowing hinges on YRC’s 26,000 Teamsters members voting to extend a labor contract into 2019 that retains pay cuts and adds operating flexibility. Balloting concludes tomorrow, and results won’t be available until the next day, Leigh Strope, a union spokeswoman, said by e-mail.
YRC is rushing to complete the refinancing before a $69.4 million bond matures on Feb. 15. YRC, which has posted annual losses since 2007, reached an agreement in December with creditors and some investors to reduce debt by $300 million, according to a statement at the time.
Lenders must submit commitments to the new loans by Jan. 23, the person said. YRC fell 2.5 percent to $19.24 at 11:14 a.m. in New York.
YRC amassed $1.4 billion in debt from acquisitions and what Chief Executive Officer James Welch has called “numerous missteps” before he took the job in 2011. The debt reduction and refinancing will cut $150 million of annual interest payments by as much as a third, Chief Financial Officer Jamie Pierson said in a Dec. 23 interview.
The company has $952 million of bonds and loans maturing by March 2015, according to data compiled by Bloomberg. Loans under a credit pact obtained in 2011 pay interest ranging from 6.5 percentage points more than the London interbank offered rate with a 3.5 percent minimum on the lending benchmark to 9.75 percentage points more than Libor with a 1.5 percent minimum, according to data compiled by Bloomberg.
As of Sept. 30, the company had $170.5 million of cash, according a Nov. 12 regulatory filing.
Teamsters are voting on a four-year extension to their current contract, which would retain a 15 percent wage cut that was reached to avoid an earlier brush with bankruptcy. The accord also grants management new powers to subcontract some transportation services and crack down on driver absenteeism.