YRC Again Escapes Bankruptcy, Barely (YRCW)

YRC Worldwide Inc. (NASDAQ: YRCW) announced a deal that saves the company from bankruptcy, but the deal also dilutes holders yet again.  The troubled trucking giant reached a deal with creditors and with union workers.  This is a comprehensive restructuring but officials did not entirely disclose terms other than that this will exceed the prior $470 million debt for equity swap.  Some debt is being converted into equity and the company will get a new flow of liquidity and capital.  The company noted that this will allow it “to achieve its growth plans and restore the company as a viable enterprise.”

YRC Worldwide’s key lenders will get a significant majority of the new-issue shares and will receive convertible secured notes that are convertible into additional common shares. The company further noted that almost all of its pending financial obligations are being held or deferred until the completion of this restructuring plan.  There is no assurance it is done as the pact does require shareholder approval, which may not come until summer.

YRC shareholders have a conundrum here.  This is going to be highly dilutive and will lower the percentage of the pot for existing shareholders.  It also keeps the company from folding entirely in bankruptcy.

YRC shares closed at $2.68 yesterday versus a reverse split-adjusted range of $2.50 to $20.00 over the last 52-weeks.  Shares are indicated down almost 10% at $2.42 in pre-market trading, indicating another 52-week low is here.

Things seem to just keep heading lower and lower here.  It is almost as if the company has gone bankrupt twice without taking the hope and entirety away of the value from common holders.  Still, this is one of those instances where the cure is perhaps worse than the disease.  The line between a turnaround or a collapse is getting less and less clear.  The logo claims “Confidence Delivered” on the site.  Really?

JON C. OGG

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