YRC Worldwide Inc. (YRCW), the trucker seeking to refinance almost $1 billion in borrowings, rose the most since May after creditors agreed to cut about $300 million in debt, a step toward winning union contract givebacks.
The accord calls for some creditors and other investors to buy $250 million of new shares at a price of $15 each, YRC said today in a statement. Bond owners will convert $50 million of their holdings to stock in a price range of $15 to $16.01.
The shares surged 21 percent to $18.12 at 10:07 a.m. in New York. That followed a gain of 37 percent earlier today, the biggest intraday increase since May 6. Overland Park, Kansas-based YRC is rushing to complete the refinancing before a $69.4 million bond issue matures on Feb. 15.
YRC’s 26,000 Teamsters-represented employees will vote by Jan. 8 on extending their contract into 2019, maintaining terms that reduced wages by 15 percent and giving the trucker new operating flexibility. Creditors had sought the labor agreement before refinancing debt, while Teamsters leaders have insisted on concessions from bondholders.
YRC piled up $1.4 billion in debt from acquisitions and what Chief Executive Officer James Welch has called “numerous missteps” before he took the job in 2011.
As of Sept. 30, the company had about $170 million of cash. It has $952 million of bonds and loans maturing by March 2015, according to data compiled by Bloomberg. The debt-reduction deal also hinges on getting holders of at least 90 percent of $124 million of pension fund debt to extend the maturity on that note, YRC said.