YRC Worldwide Inc. (NASDAQ: YRCW), the nation’s second largest
less-than-truckload (LTL) shipping company, today announced that
the United States Department of the Treasury (“UST”) intends to
provide a $700 million loan to YRCW under authorization provided by
Subtitle A of Title IV of the CARES Act.
YRCW and its operating companies Holland, New
Penn, Reddaway, and YRC Freight have been significantly impacted by
the COVID-19 pandemic. These companies collectively employ 30,000
trucking professionals, including 24,000 Teamsters. The CARES
Act assistance will be used to pay for deferred employee healthcare
and pension costs and other contractual obligations as well as to
support essential capital investment.
YRCW CEO Darren Hawkins stated, “We would like
to thank Congress for passing the CARES Act and the U.S. Department
of the Treasury for providing this vital funding which recognizes
the essential role YRCW plays in the nation’s supply chain.
Through our work with over 200,000 customers, including being a
leading transportation provider for the Departments of Defense,
Energy, Homeland Security, and Customs and Border Protection,
YRCW’s freight professionals have developed a deep understanding
of, and expertise in, the importance of a secure and reliable
supply chain.
“Our 30,000 employees have continued to serve
hundreds of quarantined communities across the country during the
pandemic and this financial assistance will enable us to bridge
this pandemic-related crisis and continue to provide essential
shipping services for the nation’s supply chain. The funding
will also enable us to continue successfully implementing our
multi-year strategic plan to transform our five powerful brands to
operate as ONE Company, ONE network to better serve our customers
and the nation’s supply chain as economic recovery takes hold.”
Transaction TermsYRCW has
entered into an agreement on June 30th under which UST will receive
29.6% fully diluted equity ownership in YRCW (pro forma for
dilution from the UST equity issuance), described in further detail
below, in connection with the loan from UST to YRCW.
YRCW will receive a loan of $700 million in two
tranches, subject to completion of definitive documentation:
- Tranche A of approximately $350 million, will be used to cover
short-term contractual obligations and certain other obligations
including pension and healthcare payments. The loan terms are
LIBOR plus 3.5%, consisting of 1.5% cash and 2.0% payment in
kind. This loan matures on September 30, 2024.
- Tranche B of approximately $350 million, will be used for
essential capital investment in trailers and tractors and is
expected to carry an interest rate of LIBOR plus 3.5% in
cash. This loan also matures on September 30, 2024.
YRC’s existing credit facilities are expected to
be amended to permit the new loan.
The material terms of the equity issuance
agreement, the loan from U.S. Treasury, and the amendments to the
existing credit facilities will be available in a Form 8-K which
will be filed with the Securities and Exchange Commission
(SEC).
Equity Grant The Company has
agreed to issue to the UST shares of common stock that, after the
issuance, will constitute approximately 29.6% of the Company’s
fully diluted common stock outstanding. The Company is relying on
Nasdaq’s temporary COVID-related exception to its stockholder
approval requirements. The Audit & Ethics Committee of the
Board of Directors of the Company, which is comprised solely of
independent, disinterested directors, expressly approved reliance
on Nasdaq’s COVID-related exception and determined that the
transaction is in the best interest of the Company’s
stockholders.
UST will hold the shares of the Company’s common
stock through a voting trust, which will be required to vote the
shares in the same proportion as all other unaffiliated shares of
the Company’s common stock are voted. The shares will be subject to
certain transfer restrictions and the Company has agreed to
register the shares for resale pursuant to a registration rights
agreement.
Forward-Looking StatementsThis
news release contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the
Exchange Act. Words such as “will,” “expect,” “intend,”
“anticipate,” “believe,” “could,” “would,” “should,” “may,”
“project,” “forecast,” “look forward,” “propose,” “plan,”
“designed,” “enable,” and similar expressions which speak only as
of the date the statement was made are intended to identify
forward-looking statements. Forward-looking statements are
inherently uncertain, are based upon current beliefs, assumptions
and expectations of Company management and current market
conditions, and are subject to significant business, economic,
competitive, regulatory and other risks, uncertainties and
contingencies, known and unknown, many of which are beyond our
control. Our future financial condition and results could differ
materially from those predicted in such forward-looking statements
because of a number of factors, including (without limitation) our
ability to secure a final agreement with the U.S. Treasury or the
Company’s existing lenders generally or on commercially reasonable
terms; our ability to generate sufficient liquidity to satisfy our
cash needs and future cash commitments, including (without
limitation) the impact of COVID-19 on our results of operations,
financial condition and cash flows; general economic factors and
transportation industry-specific economic conditions, including the
impact of COVID-19; our obligations related to our indebtedness and
lease and pension funding requirements, and our ability to achieve
increased cash flows through improvement in operations; our failure
to comply with the covenants in the documents governing our
existing and future indebtedness; customer demand in the retail and
manufacturing sectors; business risks and increasing costs
associated with the transportation industry, including increasing
equipment, operational and technology costs and disruption from
natural disasters; competition and competitive pressure on pricing;
the risk of labor disruptions or stoppages, if our relationship
with our employees and unions were to deteriorate; increasing
pension expense and funding obligations, subject to interest rate
volatility; increasing costs relating to our self-insurance claims
expenses; our ability to finance the maintenance, acquisition and
replacement of revenue equipment and other necessary capital
expenditures; our ability to comply and the cost of compliance
with, or liability resulting from violation of, federal, state,
local and foreign laws and regulations, including (without
limitation) labor laws and laws and regulations regarding the
environment; impediments to our operations and business resulting
from anti-terrorism measures; the impact of claims and litigation
expense to which we are or may become exposed; failure to realize
the expected benefits and costs savings from our performance and
operational improvement initiatives; our ability to attract and
retain qualified drivers and increasing costs of driver
compensation; a significant privacy breach or IT system disruption;
risks of operating in foreign countries; our dependence on key
employees; seasonality; shortages of fuel and changes in the cost
of fuel or the index upon which we base our fuel surcharge and the
effectiveness of our fuel surcharge program in protecting us
against fuel price volatility; limitations on our operations, our
financing opportunities, potential strategic transactions,
acquisitions or dispositions resulting from restrictive covenants
in the documents governing our existing and future indebtedness;
fluctuations in the price of our common stock; dilution from future
issuances of our common stock; our intention not to pay dividends
on our common stock; that we have the ability to issue preferred
stock that may adversely affect the rights of holders of our common
stock; and other risks and contingencies, including (without
limitation) the risk factors that are included in our reports filed
with the SEC, including those described under “Risk Factors” in our
annual report on Form 10-K and quarterly reports on Form 10-Q.
About YRC Worldwide:
YRC Worldwide Inc., headquartered in Overland
Park, Kan., is the holding company for a portfolio of
less-than-truckload (LTL) companies including Holland, New Penn,
Reddaway, and YRC Freight, as well as the logistics company HNRY
Logistics. Collectively, YRC Worldwide companies have one of the
largest, most comprehensive logistics and LTL networks in North
America with local, regional, national and international
capabilities. Through their teams of experienced service
professionals, YRC Worldwide companies offer industry-leading
expertise in flexible supply chain solutions, ensuring customers
can ship industrial, commercial and retail goods with
confidence.
Please visit our website at www.yrcw.com for
more information.
Investor
Contact:
Eric
Birge913-696-6108investor@yrcw.com
Media
Contact:
Mike Kelley913-696-6121mike.kelley@yrcw.com
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