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Less-than-truckload carrier YRC Worldwide Inc. has reached an agreement with its lenders that will extend until 2024 the terms of $580 million in loans it is using to help improve its business operations.
The move comes on the heels of a federal loan worth hundreds of millions of dollars the company received in exchange for a nearly 30% share of the company.
In a July 7 Securities and Exchange Commission filing, YRC said the new agreement with Apollo Global Capital extends the length of its loan with the group and changes some of the terms of the agreement.
Separately, the U.S. Department of Treasury announced July 1 that it had reached an agreement with YRC to provide $700 million in loans in connection with the loan under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Under the terms of this agreement, Treasury will receive a 29.6% equity stake in the company.
Included in the federal loan is $300 million designated for payments into health, welfare and pension plans for the company’s 24,000 union-represented employees. Also included are payments into the Central States Pension fund, of which YRC is the largest contributor. The other $400 million will be used by the company to upgrade its tractor-trailer fleet.
Treasury said the loan is based on a certification by the Secretary of Defense that YRC is critical to maintaining national security.
“This loan will enable a critical vendor to the Department of Defense to maintain significant employment while providing appropriate compensation to taxpayers,” Treasury Secretary Steven Mnuchin said.
Overland Park, Kan.-based YRC said the loan will help propel its long-term recovery plan.
“We would like to thank Congress for passing the CARES Act and the U.S. Department of the Treasury for providing this vital funding, which recognizes the essential role YRCW plays in the nation’s supply chain,” CEO Darren Hawkins said in a statement. “Through our work with over 200,000 customers, including being a leading transportation provider for the Departments of Defense, Energy, Homeland Security, and Customs and Border Protection, YRCW’s freight professionals have developed a deep understanding of, and expertise in, the importance of a secure and reliable supply chain.”
Treasury noted that the loan agreement includes provisions for the company to maintain employment levels and limit executive compensation, dividends and share repurchases.
In an SEC filing earlier this year, YRC said it was implementing cost-cutting measures, including reduction of capital expenditures, and temporary deferrals of operating lease payments, union health and welfare payments, and contributions to its nonunion and multi-employer pension plans.
Hawkins said the fresh infusion of money will be a big boost to the company’s revival.
“Our 30,000 employees have continued to serve hundreds of quarantined communities across the country during the pandemic, and this financial assistance will enable us to bridge this pandemic-related crisis and continue to provide essential shipping services for the nation’s supply chain,” he said. “The funding will also enable us to continue successfully implementing our multiyear strategic plan to transform our five powerful brands to operate as one company, one network to better serve our customers and the nation’s supply chain as economic recovery takes hold.”
In April, Hawkins was appointed to President Donald Trump’s Great American Economic Revival task force.
YRC Worldwide is the holding company for regional LTL carriers Holland, New Penn, Reddaway and YRC Freight, along with logistics company HNRY Logistics.
In the first quarter, YRC said its net income was $4.3 million, or 12 cents per diluted share, compared with a loss of $49.1 million, or negative $1.48 per diluted share, in the same period a year earlier. Revenue fell 2.5% to $1.15 billion from $1.18 billion.
YRC had $879.9 million of outstanding debt at the end of the first quarter, a decrease of $4.6 million from the same period a year earlier.
YRC Worldwide ranks No. 6 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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