Thursday, YRC Worldwide Inc. (YRCW) announced that it has amended certain terms of its previously announced exchange offers and has extended the expiration date for the exchange offers until December 23, unless further extended.
According to the company, the exchange offers include the company's 5.0% Net Share Settled Contingent Convertible Senior Notes and 5.0% Contingent Convertible Senior Notes due 2023, the company's 3.375% Net Share Settled Contingent Convertible Senior Notes and 3.375% Contingent Convertible Senior Notes due 2023, and the 8 1/2% Guaranteed Notes due April 15, 2010 of the company's wholly owned subsidiary, YRC Regional Transportation, Inc.
The company said that it has amended the minimum tender condition for the exchange offers, and as a result the offers are conditioned on a minimum of 70% of the aggregate principal amount outstanding of the 8 1/2% Notes, and 85% of the aggregate principal amount outstanding of the 3.375% Notes and the 5% Notes on a combined basis, being tendered in the exchange offers and not withdrawn.
The company noted that lenders holding commitments of at least 66 2/3% under the credit agreement will be required to approve the revised minimum tender condition for certain provisions of the company's credit agreement and asset-backed securitization facility to remain in effect.
The company said that it will be required to use unsecured debt or equity financing to retire any remaining 8 1/2% Notes or 5.0% Notes.
Additionally, the minimum consolidated EBITDA covenant for the second, third and fourth fiscal quarters of 2010 and the minimum available cash covenant will be reset. The company said that documentation and final terms of this tentative agreement in principle are being finalized and are subject to the approval of lenders holding commitments of at least 66 2/3% under the credit agreement.
In addition, the amendment will require the approval of multiemployer pension funds who have deferred at least 90% of the deferred contributions under a contribution deferral agreement. The company is in active discussions with its funds regarding the amendment to the minimum tender condition.
YRC company said that if it consummates the exchange offers prior to December 31, it will be able to defer approximately $19 million in interest and fees that would otherwise be due under its credit agreement on that date. If it were obligated to make this payment and did not have access to the $106 million revolver reserve, its liquidity position would become unsustainable. As a result, the company believes it is critical that it completes the exchange offers prior to December 31, 2009.
If the company consummates the exchange offers at the minimum tender conditions described above, it will have $45.0 million of its 8 1/2% Notes, outstanding following the exchange offers, which will mature in April 2010. However, the credit agreement as amended requires that all but $15 million of the 8 1/2% Notes be retired as of March 1, 2010 or the required lenders may accelerate the obligations under the credit agreement. The company's credit agreement will restrict it from using any of its operating cash, including any tax refunds it may receive relating to its net operating losses, to retire these notes, and thus the company will be required to obtain third-party financing. However, it said that there can be no assurance that it will be able to obtain this financing prior to March 1, 2010, or that the terms of any such financing will be favorable to the company or its stakeholders.
The company said that the trustee under the indenture governing the 3.375% Notes and the 5% Notes has informed the company that it will likely not agree to enter into the supplemental indenture intended to implement the amendments to these notes made in the exchange offers if the company seeks to remove the right of the note holders to require the company to repurchase those notes at certain times prior to their stated maturity.
If this occurs, the amendments to the 3.375% Notes and the 5% Notes would not become effective until the trustee agreed to them or was required by a court to agree to them. As a result, the company has waived the satisfaction of various conditions to the exchange offers relating to the proposed amendments to be made to the 3.375% Notes and the 5% Notes, including the condition that the trustee not raise any objections to the exchange offers and the condition that the supplemental indentures relating to the amendments to the 3.375% Notes and the 5% Notes shall have become effective. Notwithstanding these waivers, the company will continue to seek the applicable consents and intends to vigorously pursue any measures necessary to obtain the effectiveness of these consents.
The company will exchange the notes for shares of the company's common stock and new Class A convertible preferred stock in such amounts as are set forth in the company's Registration Statement on Form S-4, as amended, that the company originally filed with the SEC on November 9, which together on an as-if converted basis, if the note holders tender all of the outstanding notes in the exchange offers, would represent approximately 95% of the company's issued and outstanding common stock.
YRC Worldwide said that to validly tender their notes, the participating note holders will be required to become party to a mutual release with the company and consent to an amendment of the terms of the notes that would remove substantially all of the material covenants other than the obligation to pay principal and interest on the notes and those relating to the conversions rights of convertible notes, and eliminate or modify the related events of default. As of 5:00 p.m., New York City time, on December 16 a total of 57% of the aggregate principal amount of the outstanding notes had been tendered into the exchange offer.
The company said that it believes some bondholders have withdrawn as a result of their desire to tender into the exchange only on an expiration date. It expects to file an amendment to its registration statement on Form S-4 relating to the exchange offers today, and plans to request that the U.S. Securities and Exchange Commission declare that registration statement effective shortly after that filing.
YRC is currently trading on the NASDAQ at $1.04, up $0.03 or 2.96%.
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