YRC Worldwide Inc. says its lenders have agreed to reset covenants from a July 2011 credit agreement, staving off the latest concern about the trucker’s financial future.
In a Monday release, the Overland Park-based company (Nasdaq: YRCW) said all of its term credit agreement lenders and credit agreement lenders for asset-backed loans agreed to the amendments.
In addition to resetting the loan terms, the lenders will allow YRC to retain all proceeds from the auction of certain surplus property.
If YRC had not been able to secure the changes, its lenders could have forced the company to repay its loans immediately, which the company said it didn’t have the cash to do.
CEO James Welch said in the release that the agreement reflected the new business plan developed by YRC’s new management to reinvest in the company’s core business of long-haul less-than-truckload, or consolidating several customers’ smaller shipments into larger shipments for better efficiency. The company had argued that the previous loan terms were developed by prior management and included such things as next-day service and a larger distribution network, which Welch’s team has spent eight months streamlining.
“The new leadership team developed a strategy and business plan, including updated forecasts focused on reinvesting in the quality of the service we provide, and we have successfully executed against both our qualitative and quantitative objectives,” Welch said. “To date, we are pleased to have exceeded our forecast and to have reached this agreement with our lenders, which will allow us to continue building on our current momentum and successes.
“Today, YRCW has the financial flexibility needed to support our growth strategies and to continue gaining market share.”
The ability to retain auction proceeds is key because YRC is in the midst of selling several depots and other distribution centers in its network, as well as divesting its Chinese operations.