YRC Worldwide Inc. surged in extended trading after the trucker said it reached a revised labor accord with Teamsters union leaders that would pave the way for refinancing its $1.4 billion debt and avoiding default.
YRC climbed as much as 23 percent to $19.42 after the Teamsters and YRC disclosed the agreement yesterday. The stock, which closed at $15.82 in New York, jumped 21 percent on Jan. 16, the biggest gain since Dec. 23, after the company said it resumed talks with the union following workers’ rejection of a proposal last week.
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 yesterday. 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 yesterday.
YRC 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.
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 the 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.
YRC amassed $1.4 billion in debt from acquisitions and what Welch called “numerous missteps” before he took the job in 2011. The company has posted profit losses of more than $3.1 billion since 2007, including a projected adjusted loss of $102 million last year.
In December, the company reached an accord with some investors and creditors to reduce debt by $300 million through issuing $250 million of new shares and converting $50 million of bonds to shares. That agreement hinged on union workers accepting the labor proposal. YRC was planning to seek $1.15 billion of loans to refinance the remaining debt.