YRC Sets Shareholders’ Vote for Reverse Stock Split
This story appears in the Jan. 25 print edition of Transport Topics.
YRC Worldwide Inc. set Feb. 17 as the date for a special shareholder meeting to vote on a reverse stock split that follows the debt-for-equity exchange offer that was completed earlier this month.
The reverse split, in which 25 current shares will be exchanged for one new share, is meant to boost the market for YRC’s stock and allow its trading on major exchanges.
The company is seeking to reverse massive losses. It won enough support for the debt-for-equity swap after six extensions and help from investment banks.
YRC’s shares outstanding increased to more than 2 billion from 125 million when the notes due in 2010 and 2023 were swapped for shares. That exchange wiped out $470 million in debt, and holders of the swapped notes owned 94% of YRC’s shares.
That exchange was the last in a series of 15 steps including pay cuts, layoffs and terminal consolidations taken in the past 10 months to cut losses that reached nearly $750 million in the first three quarters of 2009.
“The successful debt-for-equity exchange was an important part of our comprehensive plan to reduce our cost structure,” CEO William Zollars said in a letter that was part of Jan. 19 proxy statement.
YRC also said it will try again to win adequate support for the share count changes if the shareholders vote down the plan.
The company said in its proxy filing that as many as eight YRC directors could resign and that successors will serve until the company’s annual meeting later this year.
YRC Worldwide ranks No. 4 on the Transport Topics 100 list of the largest U.S. and Canadian for-hire carriers.
In a separate development, a former employee filed a lawsuit against YRC on Jan. 15, claiming that it violated federal law in its handling of the company’s pension plan.
The lawsuit, which seeks class-action status, was filed by former employee Patrick Couch. He claims the company improperly managed the pension plan that covers non-union workers by relying too much on stock contributions.
YRC shares, which traded at $20 a share two years ago, now are worth less than $1 each. The suit includes allegations the company should have known the value of its stock would decline because of a pattern of deteriorating financial performance.
That declining value breached YRC’s duty to manage the plan to benefit employees, the lawsuit claims.
YRC’s Teamsters employees are covered by a separate pension plan.
