About two months after YRC Worldwide Inc. invoked the threat of bankruptcy, the trucking company has announced a deal to reduce its $1.4 billion debt load by $300 million.

Overland Park, Kansas-based YRC said in a Monday, Dec. 23 statement that unnamed investors have agreed to pay $250 million in cash for new common shares in the company. YRC will use the proceeds to take out its convertible notes.

After YRC completes this debt reduction, it hopes to tap the senior debt markets to refinance its term loan and asset-based loans at more favorable interest rates, the company said.

The deal hinges on two conditions. YRC must secure a ratified memorandum of understanding from the International Brotherhood of Teamsters, the union that represents a contingent of YRC's employees, and it must also convince 90% of holders of its pension fund debt to amend and extend their debt.

The proposed deal would meet the Teamsters' demand that YRC must retire at least 90% of its Series A and B Convertible Notes. The Teamsters are expected to conclude their vote on the memorandum by Jan. 8. A Teamsters spokesman declined to comment on the proposed deal or the vote.

YRC said Monday that certain noteholders and other institutional investors will pay $15 per share for their $250 million in new common stock.

The proceeds will go toward paying off the existing $69.4 million in 6% convertible notes due Feb. 15, 2014, and paying off or defeasing the outstanding $173.5 million in Series A Convertible Notes due Mar. 31, 2015.

Furthermore, holders of about $50 million in principal of the outstanding $68.2 million in Series B Convertible Notes due Mar. 31, 2015, will convert their notes to common stock at prices between $15.00 and $16.01 per share. The remaining Series B notes will remain outstanding through their original maturity date.

"These transactions will result in a substantial reduction of our debt and will position the company to address impending maturities, including the 6% Convertible Notes due in February 2014," YRC CFO Jamie Pierson said in the statement.

Eliminating the debt due in February would give YRC more breathing room, as the company's senior credit agreement requires that it must repay, extend, restructure or refinance those notes by Feb. 1.

If YRC fails to find a solution for those notes, it will be in default under its senior credit facility starting on Feb. 13.

A Monday regulatory filing noted that the investors behind the debt reduction may cancel their stock purchase agreements if the deal hasn't closed either by Feb. 13, or within five business days after satisfying the closing requirements.

That leaves YRC with just under five weeks between the Jan. 8 Teamsters vote and the Feb. 13 closing deadline to work out the details of the deal, including hammering out an agreement with the pension debtholders.

YRC CEO James Welch warned in an Oct. 30 letter to employees, "In the past, some companies in our position have simply declared bankruptcy," adding, "the better path is to refinance the debt before the due dates are upon us."

Credit Suisse AG and MAEVA Group LLC are advising YRC on its financing options and strategic initiatives.

Representatives from those firms were not available to comment.

In addition to its convertible notes, YRC has two first lien loans with JP Morgan Chase Bank NA as administrative agent.

The company has a term loan that bears interest at Libor plus 650 basis points with a Libor floor at 350, and matures on Mar. 31, 2015. The loan had $298.7 million outstanding as of Sept. 30.

YRC also has $222.2 million outstanding on a letter of credit due Mar. 31, 2015.

Some of YRC's major investors have cut their positions in the company in recent months.

Marc Lasry's hedge fund Avenue Capital Group disclosed a 17.75% stake on Aug. 19, then sold down its position in the company at the end of October. Avenue reported a 13.71% position in the company in a regulatory filing made Dec. 19. Carlyle Group LP disclosed a 13.3% stake on Dec. 19, noting that it had sold a $12.66 million principal amount of YRC's Series A 10% Convertible Notes for $11.76 million.

Another major investor, Cyrus Capital Partners LP, said it had cut its previously disclosed 17.2% stake to an 11% stake, according to an Oct. 18 regulatory filing.

And New York-based middle market debt investor CM Finance Inc. disclosed on Dec. 20 that, since Sept. 30, it has sold its $12.3 million investment in YRC's letter of credit facility.

Avenue and Cyrus declined to comment. Carlyle and CM Finance did not respond to requests for comment.

YRC reported a net loss of $44.4 million for the quarter ended Sept. 30.

As of Sept. 30, the company had $2.13 billion in assets and about $2.8 billion in liabilities.

At that time, its liquidity, including cash, cash equivalents, and availability under its asset-based loan facility, stood at $233.7 million.

YRC's debt woes stretch back to 2003, when the company paid $1.05 billion to acquire Roadway Corp.

YRC is listed on the Nasdaq exchange under the symbol YRCW. The company's stock closed up 21.91% or $3.28, at $18.25 per share, giving it a market capitalization of $163.64 million.