YRC Worldwide Inc., continuing its efforts to shed assets not directly related to its core North American less-than-truckload (LTL) business, said it has sold its 65-percent interest in Chinese trucker Shanghai Jiayu Logistics Co. Ltd., to its Chinese joint venture partner. YRC declined to identify the Chinese company or disclose terms of the transaction.
The disposal of the Jiayu asset squares with new CEO James L. Welch's plan to focus on YRC's domestic longhaul LTL network, recently renamed YRC Freight; its three U.S.-based regional LTL units, New Penn, Holland, and Reddaway; and its Canadian LTL unit, YRC Reimer. Late last year, Welch jettisoned YRC's money-losing Glen Moore truckload unit, calling it a "distraction" to his efforts to streamline the business around LTL operations.
Prior to Welch's joining the company last summer, YRC sold its dedicated contract carriage business and virtually all of its logistics division.
"This transaction allows us to further simplify our portfolio and streamline our operations as we concentrate on regaining the North American LTL market leader position," Welch said in a statement announcing the sale. The transaction is expected to close in the second quarter and is subject to Chinese regulatory approvals.
In August 2008, YRC Logistics, then the company's logistics arm, bought a controlling share in Shanghai-based Jiayu for $44.7 million. At the time, YRC said it would buy the remaining 35-percent stake during 2010 for no more than $39 million. However, the 2008-09 financial crisis, subsequent recession, and YRC's badly deteriorating financial and operating condition scuttled those plans.
Jiayu had also become a financial burden on YRC. In a federal securities filing last month, YRC said that Jiayu reported an $8.8 million operating loss in 2011, and that YRC spent $3.3 million in cash to fund Jiayu's day-to-day operations during the year.
The purchase of the Jiayu stake was part of then-CEO William D. Zollars' strategy to build an end-to-end trans-Pacific supply chain network by adding one of China's largest truckload and less-than-truckload companies. At the time of the purchase, Jiayu had 200 locations and more than 300 vehicles in its fleet.