In the culmination of a long labor negotiating and debt wrangling
process, YRC Worldwide Thursday came to new financing terms on a $700
million loan and received a $450 million asset-based loan facility, which is $50 million more than the company’s previous credit facility, the company said.
The loans will mature in 2019.
"These new senior debt facilities give the company a much less leveraged, simplified and stable capital structure. They also significantly extend the runway to continue improving the operating performance of YRC Freight and provide a healthy level of liquidity so that we may continue increasing our investment in our people, equipment and technology," YRC Worldwide Chief Executive Officer Jamie Pierson said in a statement.
Pierson said improved operating performance since 2011 made the new loans possible, and he noted that the new loans give the company more flexibility than the previous debt agreements.
"We are now well positioned to run the business with an eye toward providing ever-improving service to our customers, attractive jobs for our employees and value for our shareholders," he stated.
In December, YRC announced it would sell 3 million shares to help drive down its debt, a move that helped its financial position a bit, but the big boon to YRC’s finances came with a new labor agreement with its employee’s union.
Employees represented by the International Brotherhood of Teamsters approved a contract extension in late January, which extended the employment pact by another five years to 2019.
The approved deal was a combination of the previous attempt, which was rejected by employees, that made a few significant changes from the previous contract but still allowed YRC to extract some pay concessions from employees. These concessions, the company said, were necessary if it was to refinance its debt. At the time of the vote, the group Teamsters for a Democratic Union reported that the company would likely have had to declare bankruptcy if the new deal wasn’t approved.
At the time, Jim Hoffa, president of the International Brotherhood of Teamsters, said in a statement, called the deal “a very difficult vote for our members.”
He continued, “Now we will hold management’s feet to the fire to make sure our members’ jobs are protected and redouble our efforts to make sure this company handles its finances responsibly.”
YRC had been facing a $69.4 billion debt repayment in February that was just the first payment in what would have been around $1 billion in debt due by 2015.