- Continues Strategic Plans to Enhance Market Position and Financial Condition
OVERLAND PARK, Kan., Nov 20, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- YRC Worldwide Inc.
(Nasdaq: YRCW) announced today the financial impact of yesterday's credit
rating change from S&P. The credit rating is considered a trigger event under
the credit agreement. This trigger event requires the company to
collateralize its remaining unencumbered assets, which primarily include its
real estate and revenue equipment. The company estimates the market value of
these assets to be around $1.5 billion.
"It is unfortunate that the economic environment and financial markets are
causing these types of reactions," stated Bill Zollars, Chairman, President
and CEO of YRC Worldwide. "Yet it is important to understand these
disappointing downgrades do not change our strategic plans to combine the
National companies or improve our financial condition."
Despite the collateralization of these assets, the company's potential to
implement multiple strategic actions is not impacted, more specifically:
-- The company can enter into sale and leaseback transactions, including
the collateralized real estate. Under the credit agreement, the first $150
million of proceeds from sale and leasebacks can be reinvested in the business
or must be used to pay off its $150 million term loan. After repayment of the
term loan, the company can use proceeds as it deems appropriate to manage the
-- The company can continue to dispose of excess facilities including the
expected 150 properties from the integration of Yellow Transportation and
-- The company can also complete debt-for-debt exchanges. To the extent
the principal amount of the retired debt is greater than the amount paid, the
difference would be recognized as a gain on extinguishment of debt and
included in the company's earnings before interest, taxes, depreciation and
amortization under the credit agreement.
YRC estimates one-time fees for the collateralization to be around $7 to
$10 million that would be incurred during the fourth quarter 2008 and first
quarter 2009. The company's pricing under its revolving credit facility
remains at LIBOR plus 160 basis points, the maximum pricing under the credit
facility, which matures in August 2012. The company does not have any
significant long-term debt maturities until April 2010.
For further detail on the company's credit facility, please refer to the
company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on April 21, 2008.
This release contains forward-looking statements regarding the company's
future plans within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. It is important to note that the company's actual future results
could differ materially from those projected in such forward-looking
statements because of a number of factors, including (among others) inflation,
inclement weather, price and availability of fuel, sudden changes in the cost
of fuel or the index upon which the company bases its fuel surcharge,
competitor pricing activity, expense volatility, including (without
limitation) expense volatility due to changes in rail service or pricing for
rail service, ability to capture cost reductions, including (without
limitation) those cost reduction opportunities arising from the combination of
sales, operations and networks of Yellow Transportation and Roadway, changes
in equity and debt markets, a downturn in general or regional economic
activity, effects of a terrorist attack, labor relations, including (without
limitation), the impact of work rules, work stoppages, strikes or other
disruptions, any obligations to multi-employer health, welfare and pension
plans, wage requirements and employee satisfaction, and the risk factors that
are from time to time included in the company's reports filed with the
Securities and Exchange Commission (the "SEC"), including the company's Annual
Report on Form 10-K for the year ended December 31, 2007.
YRC Worldwide Inc., a Fortune 500 company and one of the largest
transportation service providers in the world, is the holding company for a
portfolio of successful brands including Yellow Transportation, Roadway,
Reimer Express, YRC Logistics, New Penn, Holland, Reddaway, and Glen Moore.
The enterprise provides global transportation services, transportation
management solutions and logistics management. The portfolio of brands
represents a comprehensive array of services for the shipment of industrial,
commercial and retail goods domestically and internationally. Headquartered
in Overland Park, Kansas, YRC Worldwide employs approximately 58,000 people.
SOURCE YRC Worldwide Inc.