YRC Worldwide Inc. dropped the most in eight weeks after a splinter group within its union said a labor contract extension needed for the trucker to refinance more than $1 billion of debt and avoid default may be rejected.
Voting results from YRC’s 26,000 Teamsters should be announced later today. Teamsters for a Democratic Union, a group within the union that’s critical of leadership, said on its website this morning an estimated 19,600 ballots were cast and that based on the size of stacked yes- and no-votes from major cities, the proposal “may well be going down to defeat.”
YRC fell 16 percent to $15.67 at the close in New York, the biggest decline since Nov. 13. Shares of Overland Park, Kansas-based YRC more than doubled last year.
YRC Chief Executive Officer James Welch has said investors and creditors won’t refinance debt, including $952 million of bonds and bank loans, maturing by March 2015 without extending the labor contract into 2019. The labor proposal calls for retaining a 15 percent wage cut and providing the company added flexibility such as hiring third-party trucking services and cracking down on absenteeism.
YRC negotiated an accord to allow the company to reduce debt by $300 million with the sale of $250 million of new shares and the conversion of $50 million of bonds to shares. That deal hinges on the union voting for the contract extension.
Welch is scheduled to meet with lenders tomorrow in New York to discuss new loans totaling $1.15 billion to refinance high-cost debt. That meeting was pushed back from today because results from the Teamsters vote, which ended yesterday, weren’t announced.