YRC Issues New Stock, Ends Restructuring

YRC Worldwide Inc. has completed its financial restructuring process, issuing 1.9 billion new shares of stock, driving its shares to an all-time low and raising the prospect of new steps to buoy the trading price.

On Sept. 19, YRC announced shareholder approval of the plan to issue the new stock in addition to 47.8 million shares that previously were traded.

“This is an important and required step in our restructuring process,” said Jamie Pierson, interim chief financial officer of YRC Worldwide.

Lenders now control 72.5% of the stock, while the Teamsters union has 25%, in line with a restructuring deal announced on July 22.

Approval of the new shares left other shareholders with just 2.5% of YRC’s stock. On the same day as the shareholders voted approval, YRC’s stock fell to the all-time low of seven cents a share in Nasdaq trading.

The less-than-truckload carrier’s stock price had languished below $1 per share for 35 days before the recent shareholder vote, prompting Nasdaq to tell YRC that its shares could be delisted for falling below the exchange’s $1 per share minimum trading price.

“We expected to receive this notice due to dilution of our common stock,” CEO James Welch said in a statement. “Our listing status will not affect our ability to provide reliable transportation solutions to our customers. YRC Worldwide remains confident that the company is well-positioned for long-term success.”

YRC said it has appealed the delisting notice, without announcing what it would do to boost the shares.

However, analysts such as Edward Wolfe of Wolfe Trahan & Co. and Justin Yagerman of Deutsche Bank said they expected a reverse stock split would be announced soon.

“Our sense is that management would ideally like to get its stock back up somewhere between $5-10 in a reverse split,” Wolfe said in a Sept. 19 investor note.

Yagerman noted that YRC’s stock could be diluted even more after a reverse split because the company still could issue 4.1 billion more common shares by converting notes into stock.

YRC reverted to the reverse split approach once before, in September 2010 to avoid delisting. In that action, one new share was issued for every 25 shares that were outstanding.

After the reverse split last year, YRC stock topped $8 a share and then sank to the recent low as losses continued.

YRC’s losses began in 2007 when  freight markets began slipping. In December 2007, YRC’s stock price was $427.25 a share after adjusting for the reverse split.

Under the terms of the July 22 agreement that provided at least $100 million in new capital and restructured YRC’s debt, the lenders and the union both were entitled to vote on whether to issue the 1.9 billion new shares.

A total of more than 210 million shares were voted in favor of the new share structure, with fewer than 2 million shares in opposition.