YRC Worldwide said Monday it signed an agreement in principle with its lenders and the Teamsters union on a proposed restructuring plan that would provide a cash infusion from its creditors who will receive newly issued common stock and notes.
The restructuring, intended to improve the less-than-truckload carrier’s balance sheet, is not finalized and the term sheet signed by the parties is subject to further discussions.
The announcement did not say how much new equity would be issued, but said the target date for completing the restructuring plan is April 29.
YRC in December announced that it had reached an agreement with the Teamsters that required the company to raise $300 million in new equity and the union to approve a restructuring plan.
“The principal objective of the company was to achieve a comprehensive restructuring along with a solid foundation for long-term success,” said John Lamar, chief restructuring officer and lead director on YRC’s board. “The agreement in principle as represented by the term sheet will do just that.”
The latest announcement followed a postponement of the deadline for achieving the restructuring agreement.
In a separate statement, the Teamsters said the union supports the move by YRC.
“We have some further analysis to do, and the details and definitive documentation need to be finalized, but there is now a clear pathway forward to a healthier YRC,” Teamsters General Secretary James Hoffa said in a statement.
YRC’s announcement and a Securities and Exchange Commission filing did not provide details on the amount of money that would be raised.
The agreement also:
• Waives the company’s requirement to meet first-quarter profit targets before taxes, interest, depreciation and amortization, known as EBITDA;
• Renegotiates both the company’s credit agreement and asset backed securitization agreement;
• Gives the union a second seat on the Board in addition to the one they have now; and
• Extends the company’s pension fund deferral that originally was supposed to end on May 31 to July 22
YRC is ranked No. 4 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.