YRC Worldwide Pursues Long-Term Solution to Improve Financial Condition
(Nasdaq: YRCW) today announced that it is in discussions with its banking
group to modify certain terms of its credit facilities that would enhance the
company’s financial flexibility including changes to its leverage ratio. The
company’s credit agreement defines the leverage ratio generally to be total
debt to earnings before interest, taxes, depreciation and amortization. The
company has targeted late
banks on an amendment. As a result of the discussions, YRC expects to remain
in compliance with its covenants in its credit facilities (including any
minimum leverage ratio requirement) at year end. In addition, the company has
terminated its tender offer that expired at midnight on
since the proposed wage reduction amendment to the National Master Freight
Agreement, which was a condition of the tender offer, has not yet been
ratified. The company currently expects the union amendment to be ratified
around year end 2008.
“Given the economic uncertainty, we believe it is more productive to
pursue a revised arrangement with our banks as an alternative to completing
the tender offer,” stated
Worldwide. “We continue to have good relationships with our banking group and
are confident that we can work out a mutual agreement that provides
flexibility in our leverage ratio while improving our liquidity position.”
The company currently has over
generate additional cash from sale and leaseback transactions and proceeds
from sales of excess facilities, while notably reducing its 2009 equipment
purchases due to the integration of its national companies. When combining
these actions together with the planned wage reductions for all YRC employees,
the company expects to have sufficient liquidity to effectively implement its
operating strategy well into the future.
National Integration Update
As announced previously, the company is in the process of integrating the
operations and local sales teams of its two largest brands, Yellow
Transportation and Roadway. YRC expects to have around 80 facilities either
consolidated or in the process of consolidation by the end of 2008. Due to
the early success of the integration, the company has reevaluated the timeline
and now expects the integration to be mostly complete by early spring 2009
with around 450 consolidated operations.
“We have the most experienced and dedicated employees in the industry and
they continue to exceed our expectations in integrating two large and
comprehensive networks,” said Zollars. “Based on this positive momentum, we
are confident in further accelerating our timeline that will allow us to
significantly improve density and enhance the value we provide to our
customers even sooner.”
Fourth Quarter 2008 Update
“Consistent with other industry reports, the economic recession continues
to put pressure on our volumes and pricing,” commented Zollars. “With that
said, the gap between our volume trends and others within the
less-than-truckload market appears to be narrowing as we further enhance our
networks and improve our financial position.”
Key volume statistics for the fourth quarter-to-date as of
2008
— YRC National Transportation total tonnage per day down 11.8%
— YRC Regional Transportation total tonnage per day down about 11% when
adjusting for the network changes in the first quarter 2008. Total tonnage
per day is down 20.9% without adjusting for the network changes.
Certain statements in this news release include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended (each a
“forward-looking statement”). Forward-looking statements include those
preceded by, followed by or include the words “expects,” “believes,”
“targeted” or similar expressions.
The company’s expectation regarding the ratification of the union wage
reduction is only its expectation regarding this matter. Whether actual
ratification occurs and the timing of that ratification is completely within
the control of the company’s unionized employees who are voting on the
ratification and their representatives at the International Brotherhood of
Teamsters.
The company’s expectations regarding a bank amendment and the date of the
bank amendment are only its expectations regarding this matter. Whether the
company and its banks actually enter into an amendment is entirely dependent
on the outcome of their discussions and approval of a majority in interest of
the participating banks.
The company’s expectations regarding its continued compliance with the
covenants in its credit facilities are only its expectations regarding this
matter. Actual compliance will depend upon the company reaching an acceptable
amendment to its credit facilities and its compliance with the ultimately
negotiated terms of that amendment. Whether the company can comply with those
terms may be determined by the company’s operating results or its ability to
further reduce its debt through asset sales, capital market transactions or
other means.
The company’s expectations regarding having sufficient liquidity are only
its expectations regarding this matter. Actual liquidity levels will depend
upon the company’s operating results, its access to credit facilities or
credit markets, cash received as a result of asset dispositions or capital
market transactions.
The company’s actual future results and debt levels could differ
materially from those projected because of a number of factors, including
(among others) inflation, inclement weather, price and availability of fuel,
sudden changes in the cost of fuel or the index upon which the company bases
its fuel surcharge, competitor pricing activity, expense volatility, including
(without limitation) expense volatility due to changes in rail service or
pricing for rail service, ability to capture cost reductions, including
(without limitation) those cost reduction opportunities arising from the
combination of the sales, operations and networks of Yellow Transportation and
Roadway, changes in equity and debt markets, a downturn in general or regional
economic activity, effects of a terrorist attack, labor relations, including
(without limitation), the impact of work rules, work stoppages, strikes or
other disruptions, any obligations to multi-employer health, welfare and
pension plans, wage requirements and employee satisfaction, and the risk
factors that are from time to time included in the company’s reports filed
with the Securities and Exchange Commission, including the company’s Annual
Report on Form 10-K for the year ended
The company’s expectations regarding the timing of, and results from, the
consolidation or integration of Yellow Transportation and Roadway facilities
are only its expectations regarding this matter. Actual timing and results
could differ depending on whether the company’s affected unionized employees
approve the changes, the readiness of employees to utilize new combined
processes and the effectiveness of deploying existing technology necessary to
facilitate the combination of processes.
YRC Worldwide Inc., a Fortune 500 company and one of the largest
transportation service providers in the world, is the holding company for a
portfolio of successful brands including Yellow Transportation, Roadway,
Reimer Express, YRC Logistics, New Penn,
The enterprise provides global transportation services, transportation
management solutions and logistics management. The portfolio of brands
represents a comprehensive array of services for the shipment of industrial,
commercial and retail goods domestically and internationally. Headquartered
in
SOURCE YRC Worldwide Inc.