http://www.kansascity.com/2014/01/10/4740900/yrc-worldwide-shares-plunge-22.html
( So , what does YRC do now ? )
( So , what does YRC do now ? )
YRC Worldwide shares plunge, lender meeting canceled
January 10
BY MARK DAVIS
The Kansas City Star
With no word coming from YRC Worldwide Inc. Friday, investors hammered its stock price and analysts speculated on the trucking giant’s future.
With no word coming from YRC Worldwide Inc. Friday, investors hammered its stock price and analysts speculated on the trucking giant’s future.
Investors, shippers and employees had hoped to hear how the company would respond to the Teamsters’ overwhelming defeat Thursday of a contract proposal that management had called critical to YRC’s financial health.
“We are unsure what Plan B is, but we expect to hear about it soon,” analyst David Ross said in a note to clients of Stifel Nicolas and Co. Inc.
Teamsters members voted 61 percent against the deal that would have extended a 15 percent pay cut and sharp pension reduction into 2019 and make changes to raises, vacation pay and YRC’s use of other carriers. Their current contract runs through March 2015.
Without approval, the Overland Park-based company had warned in recent weeks it would be unable to refinance more than $1 billion in debts that it can’t repay. Chief executive James Welch even told employees in a letter that some companies in such circumstances have filed for bankruptcy.
Welch, in a statement Thursday after the contract vote, said the company’s fleet of 15,000 trucks continued to serve its 250,000 customers and that YRC was in contact with the Teamsters about its options. A meeting with lenders, set for Friday, was canceled.
With no additional guidance from the company, Wall Street analysts warned that YRC may lose freight business to rival carriers. And they mulled the possibility of a bankruptcy filing.
YRC shares fell $2.09, or 13.3 percent, to close at $13.58. At one point, shares fell as low as $11.81. The drop followed a 16 percent decline Thursday when early reports suggested the contract proposal might fail.
Shares of other trucking companies rallied on the possibility they may gain if shipping customers become uneasy about using YRC Worldwide. Shares of Arkansas Best Corp. and Old Dominion Freight Line were up more than 2 percent and shares of Con-Way Inc. were up more than 5 percent.
“Many of them (shippers) may already be exploring the option of redirecting at least some freight to other carriers,” equity analyst Jason Seidl said in a note to clients at Cowen and Co.
Most of the other carriers, Seidl said, likely have “contingency plans for taking on additional freight.”
YRC executives had complained during the company’s previous financial struggles that rivals were unfairly steering shippers away from YRC. They said competitors played on fears that YRC wouldn’t be able to deliver.
The company had gone to great lengths in 2009 and 2010 to restructure its finances and win concessions from its Teamsters employees to avoid a bankruptcy reorganization.
Seidl, in his note Friday, said those efforts had merely pushed the financing question down the road and that bankruptcy “cannot be ruled out at this point, in our opinion.”
However, analyst Thomas Albrecht, in a note to clients at BB&T Capital Markets, said a bankruptcy filing wouldn’t be an “automatic byproduct” of the failed contract vote.
YRC, Albrecht said, could “go back to the Teamsters with a new proposal.” It also could sell some assets to raise cash, with Albrecht mentioning its profitable regional carriers – New Penn, Reddaway and Holland – as candidates. YRC Worldwide also operates YRC Freight, its struggling national carrier.
Finally, Albrecht said the lenders are under pressure to work with YRC to avoid bankruptcy, as they have in the past.
“Chapter 11 bankruptcy has typically been a death knell for a trucking company,” Albrecht said in the note.
Teamsters officials had said Thursday that its members rejected the contract proposal after giving up billions of dollars over five years to help solve the company’s finances. The vote showed “a majority made the decision not to sacrifice anymore,” Teamsters freight division director Tyson Johnson said.
Welch, in the company’s statement Thursday, blamed the outcome on timing.
The mail-in vote ran from the second week of December to Jan. 8. Most Teamsters, he said, had voted before Dec. 23 when the company announced a partial refinancing deal.
YRC’s deal with lenders and investors would have boosted company finances by $300 million, but it was contingent on the Teamsters approving the contract extension and changes.
Some employees offered their own ideas of why the contract failed.
A Reddaway employee said some no votes stemmed from bonuses that management collected even while asking the union to give more to cover the company’s woes.
“They’re not giving back to help us,” he said, asking not to be identified because it could jeopardize his work.
A Holland driver in Michigan said many Teamsters would have supported simply extending the current contract.
“We were told at first by our local union officials that it would just be an extension, so there was a great deal of anger when they asked for more,” he said, also asking not to be identified by name.
Rafael Toledo, a long-time Holland driver in Buffalo, N.Y., said management erred by not asking employees what they needed to compete against rivals. For example, he said, drivers’ productivity has suffered from a restriction on vehicle speeds aimed at saving fuel.
“I hope this sends a message to Mr. Welch,” Toledo said. “We want to be competitive.”
http://www.kansas.com/2014/01/09/3219511/teamsters-reject-yrc-worldwide.html
Teamsters overwhelmingly reject YRC contract extension
- The Kansas City Star
- Published Thursday, Jan. 9, 2014, at 5:02 p.m.
- Updated Friday, Jan. 10, 2014, at 12:02 a.m.
Teamsters employees at trucking giant YRC Worldwide Inc. on Thursday overwhelmingly rejected extending a concessions-laden contract that the company said it badly needed.
Before the vote, YRC executives had said rejection would put the Overland Park-based company in jeopardy. They said lenders demanded the contract extension before they would refinance more than $1 billion in debts the company can’t repay.
YRC executives were scheduled to meet Friday with lenders in New York. A company statement said YRC officials were “in contact with Teamster leaders to explore options.”
Official results of a monthlong mail-in vote tabulated on Wednesday and Thursday showed that 61 percent rejected the pact’s extension for five years and 39 percent approved it, according to the International Brotherhood of Teamsters.
Ballots had been cast by 19,651 of the roughly 26,000 Teamsters who work for YRC, according to Bloomberg News.
“The Teamsters Union believes in democracy, and we’ve let the democratic process take its course,” said Tyson Johnson, director of the Teamsters national freight division. “Our members have made huge sacrifices to keep this company alive and a majority made the decision not to sacrifice anymore.”
YRC said it would operate normally despite the vote’s outcome.
“It is business as usual as we have approximately 15,000 trucks on the road today serving 250,000 customers. We will keep our customers, employees and stakeholders advised of our efforts,” chief executive James Welch said in a statement.
“While we are disappointed in the outcome of the vote, we believe that timing of events related to our refinancing did not work in our favor. Many employees had already returned their ballots prior to Dec. 23, the date the company announced it had a refinancing agreement in place. We believe that was information employees needed to make a fully informed decision.”
YRC said in December it had worked out a $300 million deal with lenders and investors, but its completion depended on the union’s approval of the contract extension.
Previously, Welch had said in a DVD mailed to Teamsters’ homes that the vote and corporate refinancing were needed to “save all our jobs and our company.”
Totals from the Teamsters union showed that Local 41 in Kansas City rejected the contract extension overwhelmingly. Its members voted 71.4 percent against the extension. In a 2010 vote, 76.4 percent had approved the existing contract.
The contract extension’s failure spread across the company’s national footprint. The Teamsters’ report showed defeat at larger union locals in Milwaukee; Cincinnati and Akron, Ohio; Louisville, Ky.; Atlanta; Chicago; Charlotte, N.C.; Portland, Ore.; Detroit and many others.
A few larger locals had approved, including those in Toledo, Ohio; Union, N.J.; Hempstead, N.Y.; and Salt Lake City, the results showed.
Despite the company’s warnings, several Teamsters members had openly rejected the contract extension during the month-long mail-in period for the vote. Some posted photos of themselves on Facebook with “no” marked on their ballots before mailing them in.
Approval would have meant the 15 percent pay cut the Teamsters have worked under since 2009 would continue into 2019, as would pension and other benefits reductions they had approved in three earlier votes.
It also would have made other changes to work rules, vacation benefits and other matters that management said would make the company flexible enough to compete with its mostly non-union rivals.
The Teamsters’ current contract runs through March 2015.
“Our members have sacrificed billions of dollars in wages and pension benefits over the past five years, and yet the company has been unable to recover from the disastrous policies of the previous management,” Jim Hoffa, the Teamsters’ general president, said in the union’s announcement.
Welch, a former longtime employee, returned to the company as chief executive in July 2011.
Much of the company’s debt piled up previously through acquisitions of other large trucking companies. It has been unable to repay the debt as business deteriorated during the long recession and failed to recover substantially.
YRC’s shares fell $2.99, or 16 percent, to $15.67 Thursday amid early indications that the contract would not be approved.
Among those was an online post Thursday morning from the Teamsters for a Democratic Union, an independent group unconnected to the International Brotherhood of Teamsters.
It said the group’s observers at the ballot counting had indicated that stacks of “no” ballots seemed larger than “yes” ballot stacks. The post suggested that the contract would fail.
Welch, having emphasized the importance of extending the contract, declined in December to talk about what plans the company had in the event of a failure.
“I wouldn’t want to speculate anything along those lines because we want to get through this ratification first. That’s our most important thing on our radar,” Welch had said.
No comments:
Post a Comment