YRC Worldwide is looking to unload up to 3 million shares in order to repay coming debt obligations, according to a recent company filing with the Securities and Exchange Commission.
The company, which is in talks with the International Brotherhood of Teamsters to renew its current contract with employees to reduce costs, is facing a $69.4 million debt payment in February. According to reports, the company will see debt obligations totaling more than $1 billion come due in the next two years.
Through Dec. 2, YRC saw its stock price range from $17.99 per share down to $7.06 per share. Its low for 2013 of $5.75 per share occurred during the first quarter.
In the document, officials also laid out why a new contract with employees is necessary for the continued health of the company. A new deal with the Teamsters would extend the existing contract, which expires in 2015, to 2019.
“If we are unable to extend our existing union agreements, we may be unable to refinance or restructure the portions of our debt which mature in 2014, which would have a material adverse effect on our business, financial condition and results of operations,” the company said in the SEC filing. “Any deterioration in our relationship with our unions could also place us at a disadvantage relative to our nonunion competitors."
YRC also cited potential pension funding increases, insurance pressures, the cost of compliance with government regulations and a host of other factors that have been putting pressure on the company. Finally, it painted a very clear picture of where the company stands today.
"If we are unsuccessful in meeting our financial covenants, we will need to seek an amendment or waiver from our lenders or otherwise we will be in default under our credit facilities, which would enable lenders thereunder to accelerate the repayment of amounts outstanding and exercise remedies with respect to collateral. If our lenders under our credit facilities demand payment, we will not have sufficient cash and cash flows from operations to repay such indebtedness," it wrote in the filing, adding that this or other events related to the company not paying down its debt would have "a material adverse effect on our financial condition and liquidity."
As for a new contract, a decision could come soon pending a meeting today between YRC and local union officers. According to the website Teamsters for a Democratic Union, however, the outcome of any pending vote on a new contract isn't a sure thing for YRC.
If the local officers approve a proposal to put the issue to the members, a vote could come soon," it said. "The IBT constitution requires a majority vote of approval by the 26,000 YRCW Teamsters for any contract extension. Members should have a chance to discuss and evaluate any proposal before it is mailed out for a vote."
"On Nov. 20-21, management presented a laundry list of concessions to the IBT Freight Division," it continued. "Members have reacted with anger, and hope that the proposal will be modified before coming to a vote."