YRC Worldwide completes debt-equity swap, considered key step in averting bankruptcy filing

YRC Worldwide completes critical debt swap deal

NEW YORK — YRC Worldwide Inc., one of the nation’s largest trucking companies, said Thursday it has cleared a critical hurdle in its effort to avoid filing for bankruptcy protection by completing a debt-for-equity exchange with its bondholders.

Chairman and CEO Bill Zollars called the successful exchange of notes “a major turning point” for the company, allowing it to “move forward from a more solid financial foundation.”

The company, which operates trucks under the Yellow, Roadway and New Penn brands, said $470 million of its outstanding debt was tendered by holders, which it will exchange with 37 million common shares and about 4.3 million convertible shares. Together that will make the stakes of current shareholders virtually worthless.

Now that the debt-to-equity swap is completed, the company will be able to defer approximately $19 million in lender interest and fees that had been due Thursday and will have access to a $159.8 million credit line.

The company, based in Overland Park, Kan., also said it expects to defer $20 million to $25 million in additional lender interest and fees per quarter during 2010.

The company warned earlier this month that it needed access to a $106 million standby credit line and permission from its lenders to delay a $19 million payment in order to avoid bankruptcy.

Longbow Research analyst Lee Klaskow said he believes access to nearly $160 million in credit will allow the company to get through the first three months of the year, typically the slowest for trucking companies. YRC said it can defer additional interest and fees, and Klaskow thinks the company could see some customers returning.

YRC has said it lost customers to its competitors as rumors of a possible bankruptcy filing circulated in recent months. The company launched a campaign to defuse bankruptcy rumors — sending top executives to speak directly to its biggest customers and putting up posters in trucking terminals in an effort to rally employee morale.

YRC shares lost 16 cents in morning trading, dropping to 83 cents.