YRC gets financing to pay off debt

YRC Worldwide Inc. said yesterday it has raised enough capital to pay off a $45 million unsecured loan by an April 15 deadline. The announcement removes one of the last short-term obstacles to the troubled less-than-truckload (LTL) carrier's remaining financially and operationally viable throughout 2010.

YRC said investors have agreed to buy $70 million of bonds in what is known as a "private placement." Providing the company meets certain conditions of December's successful debt-for-equity swap—where YRC's bondholders agreed to exchange $530 million in debt for 1 million newly issued equity shares—it will have an estimated $20 million in proceeds available for general corporate uses.

The financing agreement is negative news for YRC's competitors in that it reduces the chances of a tightening in LTL supply as a result of a possible bankruptcy.

However, one analyst, Satish Jindel, president of Pittsburgh-based SJ Consulting, said there is currently 31 percent overcapacity in the LTL marketplace, about double YRC's market share of roughly 15 percent. If Jindel's estimates are accurate, the market would still face a capacity glut even if YRC were to completely exit the market.