YRC requests amendment to its loan covenants

Less-than-truckload (LTL) carrier YRC Worldwide Inc. said today it has requested to amend its loan agreement signed last July so it can conform to the agreement's requirements.

The Overland Park, Kan.-based carrier, which flirted with bankruptcy in late 2009 and has struggled financially ever since, said in a regulatory filing that it wants to increase its total leverage ratio—the ratio of debt to earnings before interest, taxes, depreciation, and amortization, by 35 percent to 55 percent. It's also seeking to relax certain financial thresholds to make it easier to meet the agreement's debt covenants.

YRC telegraphed today's move in late February, when it said in a government filing that it would need to renegotiate terms of the credit agreement because it wouldn't earn enough money to meet the requirements.

YRC said in today's filing that there are no assurances its lenders will agree to its request.

FRESH CONCERNS

Fresh concerns about YRC's continued viability have been reflected in recent months after the company's "credit-default swaps," which are sophisticated financial wagers made to hedge against a company's credit strength, began climbing.

The swaps, which investors use to protect themselves against the risks of a company's insolvency, rose to their highest levels since February 2009, according to a report on Bloomberg News. YRC spent all of 2009 on a rapid downward slide, culminating in the company's needing a debt-for-equity swap on New Year's Eve to avoid a bankruptcy filing.

James L. Welch, who was named YRC's new CEO last July, has tried to right the company in part by a series of asset sales and divestitures that would allow it to focus on its North American less-than-truckload business.

YRC operates three U.S. regional LTL carriers, as well as one in Canada. It also operates a long-haul LTL business, YRC Freight, that has struggled for several years and which has become Welch's top priority.