YRC says its continuing to execute refinancing strategy
YRC Worldwide CEO James Welch said the company had pursued a deliberate strategy to improve both operations and our balance sheet, one of those strategies being a new memorandum of understanding with the Teamsters Union. (Courtesy: YRC Worldwide)
The Trucker News Services
OVERLAND PARK, Kan. — YRC Worldwide Inc. said Monday it was continuing to execute on its plan to refinance its capital structure by successfully achieving yet another milestone.
“The affirmative vote from local International Brother of Teamsters leaders allows us to begin the ratification process by which the company is seeking to extend the current Memorandum of Understanding (MOU) to March 31, 2019, gain additional operating flexibilities in areas such as the increased use of purchased transportation and utility employees, among others, and allows us to move forward with our effort to refinance the company's balance sheet," YRC Worldwide CEO James Welch said.
The company announced Friday that local IBT leaders had approved sending the company's proposed changes to the MOU to its 26,000 YRCW members for a vote.
Results are expected by Jan. 8, 2014.
The company has already begun holding meetings with employees to discuss the proposal, which seeks to extend the MOU five years and provides operating flexibilities that will enable the company to more effectively compete and serve customers in the North American LTL market. The proposal will not reduce wages, health or pension contributions for current employees.
“This has been a long, two-year journey that started with shedding non-core assets which led to an intense focus back on our core business — North American LTL,” Welch said of the company’ two-year plan. “Now, with improved results, renewed focus on our people and our processes, and support from our single largest partner, we are at the stage where we can finally address the bloated balance sheet that we inherited when we took over in July 2011.We have pursued a deliberate strategy to improve both our operations and our balance sheet, and we will constantly work to improve margins and returns for our investors. This agreement and our contemplated financings will be the final hurdle we need to clear to have a strong, stable business, which will provide great value for our stakeholders, job security for our employees and improved service for our customers.”
Welch said both union and non-union employees had played a critical role in YRC Worldwide emerging from the economic downturn and previous management missteps, and said the company was driving toward recovery.
“We appreciate the sacrifices that all of our employees and their families have made,” Welch said. "The good news is our proposed agreement will not cut current wages of existing employees or reduce their health and pension contributions, which were important considerations as we designed the proposal to cut costs and improve service in this competitive industry environment."
Savings from the proposed agreement and other corporate initiatives are forecasted to be approximately $100 million per annum; the majority of which would have been realized if the agreement would have been in place at the beginning of 2013.
“It has not been without its challenges, but we are pleased with our refinancing progress to date and believe that with this agreement and resulting savings we will be able to not only delever the balance sheet and extend our maturities, but will also be able to decrease our interest expense,” YRC Worldwide CFO Jamie Pierson said. “With this agreement to vote in hand, we are now focusing on getting out to the front lines where the real work occurs and communicating with our hardworking men and women about why this new proposed agreement is critical to our company's future.”
Pierson said the foundation of YRM Worldwide is the strength of the support of YRC stakeholders including our employees, lenders, shareholders and, most importantly, its customers.
“The effectiveness of ratification is conditioned on the company receiving a majority vote to adopt the proposed agreement from the bargaining unit employees and retiring at least 90 percent of the outstanding Series A and B Notes through a range of potentially deleveraging options,” Pierson said “The effectiveness is also conditioned on the company making reasonable efforts to refinance the existing Credit Agreement and ABL facility on terms that are better than those that are currently in place. We have been working in earnest with both Credit Suisse and MAEVA to those ends."