YRC Avoids Bankruptcy With Debt-For-Equity Swap
Bondholders approve conversion of $470 million worth of debt into stock
December 31, 2009
YRC Worldwide, an Overland Park, Kan.-based trucking company, said on Thursday that bondholders approved a debt-for-equity swap, allowing the company to dodge bankruptcy.
The company received tender offers worth $470 million, representing 88% of the company’s outstanding notes, according to a press release from the company. The offer deadline was extended several times.
Bondholders will be issued Class A convertible preferred stock equivalent to 94% of the company's total issued and outstanding common stock, the company said. YRC expects to complete the exchange by Jan. 5.
YRC will defer $19 million in fourth quarter lender interest and fees as part of the previously announced credit restructuring, and the company will be able to access a $159.8 million revolver under the terms of its $950 million revolver.
Moody’s Investors Service considers the company’s conversion of the debt into equity as a distressed exchange, a move to avoid default “that is significantly inferior to a full repayment of the obligations at par.”
Moody's remains concerned about YRC's ability to improve its financial condition over the longer-term. Moody's revised YRC's probability-of-default rating to Ca\LD from Ca.
Moody's affirmed other YRC ratings, including a Caa3 corporate family rating and YRC Regional Transportation, Inc.'s 8.5% notes due 2012.
The credit rating agency's outlook on YRC was changed to stable from negative.
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