YRC to Meet with Lenders After Union Backs Longer Contract
YRC Worldwide Inc. officials will meet with lenders Jan. 28 to outline a $1.15 billion debt refinancing plan, after the Teamsters union’s approval of a four-year contract extension through 2019.
In regulatory filings Jan. 28, the company said it had “launched a process to refinance” asset-backed and term loan facilities with a new $450 million asset-backed loan and a $700 million term loan and slated the meeting with lenders.
The company announced in a statement that the approval of the contract extension cleared the way for a previously arranged $300 million refinancing to be done primarily through issuance of new shares.
Union members voted by a 2-1 margin to extend the contract beyond the original March 2015 expiration.
YRC also outlined other financial progress, saying the fully implemented savings related to the contract extension would produce adjusted earnings before interest, taxes, depreciation and amortization of $350 million to $360 million this year, or $100 million more than last year.
“We took another significant step toward providing our employees the job security they deserve while providing our prospective lenders and equity investors the path they need for the company to achieve a complete recapitalization and achieve a healthy capital structure,” James Welch, YRC’s CEO, said in a statement about the extension process.
The first proposal to extend the contract to 2019 was rejected Jan. 9. Union leaders and the carrier subsequently negotiated changes. The deal includes 40-cent-per-hour wage increases starting in 2016, a $750 lump sum payment and an extension of the wage increases to dock, clerical and maintenance workers.
The lump sum and other changes to the contract take effect once the refinancing is complete, Welch told Transport Topics.
It maintains cuts of 15% in pay and 75% in pension contributions that were in the previous contract.
