YRC refinances $1.1 billion in company restructure
YRC Worldwide Inc. announced Thursday that it completed $1.1 billion in refinancing, wrapping up a restructuring plan that began last month when the company signed a new five-year Teamsters contract.
The company closed on a new $700 million term loan and a $450 million asset-based loan. The new asset-based facility is $50 million larger than the company’s current asset-based facility and will support approximately $365 million letters of credit at closing, YRC said in a news release.
The new asset-based loan gives YRC the option to increase the facility size by $100 million to accommodate future growth and may provide additional liquidity for the business going forward. The proceeds from the new term loan facility will be used to refinance the previous term loan and asset-based loan facilities that put in place in August 2007 and subsequently restructured in July 2011, the release stated.
The new facilities will extend maturities to 2019 and provide interest savings to the company of approximately $40 million to $50 million annually.
“These new senior debt facilities give the company a much less leveraged, simplified and stable capital structure. They also significantly extend the runway to continue improving the operating performance of YRC Freight and provide a healthy level of liquidity so that we may continue increasing our investment in our people, equipment and technology,” said Jamie Pierson, chief financial officer of YRC Worldwide.
The new contract with the International Brotherhood of Teamsters was approved Jan. 27 by a vote of 12,267 to 6,314 and gave YRC financial flexibility.
Locally, YRC employs a group of Cumberland County warehouse workers, a small contingent of Lancaster workers and those who work at its regional trucking firm, New Penn Motor Express Inc. in Lebanon.
James Welch, chief executive officer of YRC Worldwide, called Thursday’s refinancing moves “the culmination of a two-year journey and marks the final step in the company’s capital structure transformation.
“We are pleased with the support we received from each of our stakeholders and will now have the ability to shed many of the distractions of the past several years and focus solely on improving the operations of the business,” Welch added.
The market has responded well to the refinancing plan. YRC Worldwide stock was trading below $13 a share a month ago but closed at nearly $21 a share Thursday.