U.S. trucking giant YRC Worldwide
The company said holders of 88 percent of the company's outstanding notes had agreed to the swap, including 70 percent of YRC's 8-1/2 percent notes. It was that group of noteholders who had been holding up the exchange, and who have been publicly pressured in recent days by the company's union to agree to the deal.
On Wednesday, YRC had warned that if enough noteholders did not agree to the swap it might need to file for bankruptcy.
Its shares were down 2 cents at 97 cents in early trade on Thursday.
The company has been trying to relieve itself of $536.8 million in debt, so the exchange of $470 million in notes leaves YRC still facing more than $66 million it will need to come up with to make remaining noteholders whole.
But the debt relief is enough to appease anxious lenders and give the company more time to restructure.
The success of this note exchange marks a major turning point for YRC Worldwide, said YRC CEO Bill Zollars in a statement. With our significantly restructured balance sheet and enhanced liquidity, we will move forward from a more solid financial foundation.
Under the terms of the swap, YRC said it will issue to tendering noteholders approximately 37 million shares of common stock and 4.346 million shares of Class A convertible preferred stock which, together on an as-if converted basis, will represent approximately 94 percent of the company's total issued and outstanding common stock.
YRC said it will now be able to defer $19 million of fourth-quarter lender interest and fees, and will have access to $159.8 million in revolver reserves. As well, YRC said it expects to defer additional lender interest and fees of $20 to $25 million per quarter during 2010.
While analysts welcomed the news, they warned that the company is still not on solid footing, and faces many challenges, including recovering customers who fled to lower-priced, more stable competitors, and stemming a cash bleed.
This doesn't guarantee them survival but it gives them a shot, said Dahlman Rose analyst Jason Seidl. They are still in a very difficult situation.
YRC, which is the largest U.S. trucking firm handling smaller, or less-than-truckload shipments, has laid off thousands of workers and cut deals with labor and lenders over the last year trying to survive a downturn in the economy and a heavy debt load tied to a string of acquisitions.
(Reporting by Carey Gillam, editing by Dave Zimmerman)