To keep itself viable, YCRW has struck numerous agreements to revise credit accounts, conducted layoffs, received nearly
$2 billion in concessions from its union workers, and
sold off divisions of the company. Now, it is trying to execute a debt-for-equity swap which would allow it to postpone that payment and also gain access to more than $100 million in a revolving credit account to help keep it liquid.
Terms of the swap, according to Dow Jones Newswires, state that bondholders would gain a 95% stake in YRC in exchange for forgoing debt. There would also be a change in the Board of Directors. But, as of this morning, several holdouts still remain and YRC has extended the deadline for the swap several times already, the latest being midnight tonigh.
Now, to put pressure on the holdouts, the Teamsters plan a protest for this afternoon outside the Manhattan offices of Brigade Capital Management, one of the hedge funds the Union believes is delaying the process.
“All bondholders need to recognize that the livelihoods of 30,000 Teamster members depend on their willingness to take part in the exchange,” said Teamsters General President Jim Hoffa. “The workers, the pension funds, the secured lenders, a majority of bondholders and other stakeholders have made sacrifices and contributed to the restructuring. Now it is time for the remaining bondholders to recognize what is at stake and do their part. The company’s customers need to know there is a light at the end of this tunnel.”
The Teamsters identified Brigade Capital Management and JMB Capital Partners, and banks UBS, Barclays and TD Bank as holdouts.
“It is unconscionable that these bondholders are playing chicken with tens of thousands of lives for minimal financial reward, either hoping for a better deal or they have derivative coverage,” said Teamsters Freight Division Director Tyson Johnson. “They need to recognize the sacrifices already made by these workers and the devastating affect a bankruptcy would have on their lives.”
According to Dow Jones, as of Tuesday night, nearly 59% of 2010 notes had been converted and 94% of two other series notes. To meet the terms of the swap, YRC needs 70% of the 2010 notes converted and 85% of the other notes.
It’s not an ideal situation, of course. Banks don’t want to run businesses, especially trucking companies, but let’s hope for once that the bondholders recognize what is the lesser of two evils and secure the tens of thousands of jobs at stake this holiday season.
Update: As of mid-afternoon, the Teamsters had called off their protest of Brigade Capital Management after the hedge fund, along with fellow fund JMB Capital Partners, said they’d tendered all their bonds, according to FIN Alternatives, which covers hedge funds and private equity news.
