With some analysts predicting bankruptcy by this weekend, YRC Worldwide (YRCW) has been able to secure enough participation in its debt-for-equity exchange to postpone a $19 million interest and fee payment that was due today and secure a lifeline of sorts in the form of $159.8 million in credit.
“The success of this note exchange marks a major turning point for YRC Worldwide - with our significantly restructured balance sheet and enhanced liquidity, we will move forward from a more solid financial foundation,” Bill Zollars, Chairman & CEO, said in a statement. “Our comprehensive plan could not have been accomplished without the collective cooperation and continued support of our many stakeholders, including our lenders, our noteholders, and our employees.”
YRCW said that it had received commitments to exchange approximately $470 million in debt for 94% of the common stock in the company. There were several types of outstanding notes that YRCW needed to convert to meet the requirements to defer the $19 million payment and access the credit, which is part of a $950 million revolving credit account.
All told, 37 million shares of common stock will be issued to noteholders and 4.346 million shares of Class A convertible preferred stock will be issued. Combined, the stock total represents 94% of the company’s total issued and outstanding common stock, it said.
In addition the deferment of today’s payment, YRCW will also be able to defer additional interest and fee payments of $20 to $25 million per quarter during 2010, depending on its usage level of the revolving credit account. The settlement of the notes is expected to be complete by Jan. 5, 2010.