YRCW Receives Stakeholders' Consent - Analyst Blog
September 20 2011 - 4:30AM
Zacks
The world’s leading transportation
service provider, YRC Worldwide (YRCW), received
approval from its existing shareholders to issue fresh shares in
the market for restructuring its sagging finances.
Earlier, in April 2011, YRC
Worldwide entered into a deal with its creditors and labor union
Teamsters Brotherhood to reconsider its financial position. The
lenders are expected to inject fresh capital in return of equity
capital and convertible debts. If this deal succeeds, the lenders
will gain a 72.5% equity control and the labor union will get a 25%
equity control, leaving a mere 2.5% for the existing shareholders
of the company. Thus, under this asset-backed securitization
facility, the company will significantly dilute the wealth of the
existing shareholders.
Complying with its debt
restructuring plans, YRC Worldwide has already divested the
majority of YRC Logistics division to a private equity firm, Austin
Venturesin August 2010.
Over the last 30 days of trading,
YRC Worldwide shares were trading below $1 per share, resulting in
a delisting notice from Nasdaq. The company has already received
another delisting notice from Nasdaq for issuing shares without the
shareholders’ consent.
During the last two and half years,
YRC Worldwide has been reeling under the threat of bankruptcy
resulting from a significant fall in freight volume coupled with
its highly leveraged balance sheet.
Although the U.S. trucking industry
is recovering from the slowdown, YRC Worldwide fails to cope with
this current recovery. Currently, the company is facing intense
competition from Arkansas Best Corp. (ABFS),
Con-way Inc. (CNW) and Knight
Transportation Inc. (KNX).
We, thus, maintain our long-term
Neutral recommendation for YRC Worldwide. Currently,YRC Worldwide
has a Zacks#4 Rank, implying a short-term Sell rating.
ARKANSAS BEST (ABFS): Free Stock Analysis Report
CON-WAY INC (CNW): Free Stock Analysis Report
KNIGHT TRANSN (KNX): Free Stock Analysis Report
YRC WORLDWD INC (YRCW): Free Stock Analysis Report
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