YRC Climbs After Saying Talks Resumed on Union ConcessionsThomas Black
YRC Worldwide Inc. rose after the trucking company said it resumed talks with the Teamsters union following workers’ rejection of a proposal last week for concessions needed to refinance debt and avoid bankruptcy.
The shares climbed 21 percent to $15.47 at the close in New York, the biggest advance since Dec. 23. The Overland Park, Kansas-based company’s stock had dropped 32 percent through yesterday from Jan. 8, the day before the union announced the vote results.
YRC said it’s discussing a reworked proposal that will satisfy creditors and workers. Union members at the company had voted 61 percent to reject a contract extension that kept a 15 percent wage cut, delayed salary increases and reduced vacation time. Investors and creditors had demanded an accord as a condition for refinancing $1.4 billion of debt.
“Although the company must achieve operational costs savings in the agreement, we also understand that simply re-voting the same proposal is not an option,” Chief Executive Officer James Welch said in a statement today.
YRC has said an extension of the labor contract into 2019 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 rejected labor proposal also called for operating flexibility, including the ability to hire third-party trucking services and a crackdown on absenteeism. That proposal would have reduced costs by $100 million a year, YRC said in a Jan. 10 filing, with more than half of the savings coming from delayed raises, less vacation time and benefits.
The Teamsters told the company it will not hold a second vote on the same proposal, the union said in a statement posted on its website today. YRC requested the new round of talks, the union said.
“We are willing to consider a modified proposal that would protect our members and enhance the company’s financial position,” the union said. “It must contain meaningful improvements over the last proposal.”
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.
As of Sept. 30, YRC had about $170 million of cash to face a $69.4 million bond issue that matures on Feb. 15. Besides the loan that matures in September, the company has $556.7 million of loans and bonds maturing in March 2015.
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.