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Home » YRC director appointed by Teamsters in advisory pact with carrier, filings show
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YRC director appointed by Teamsters in advisory pact with carrier, filings show

May 13, 2013
Mark B. Solomon
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A firm controlled by a YRC Worldwide Inc. director who was chosen by the Teamsters union signed a contract with YRC in late February to perform advisory services in "connection with one or more potential transactions and/or strategic initiatives" that YRC may pursue, according to a filing with the Securities and Exchange Commission (SEC).

According to a highly placed source, New York-based MAEVA Group LLC, a corporate restructuring firm, was involved in YRC's efforts to make an informal and unsolicited offer in late March to acquire Arkansas Best Corp., the $2.1 billion holding company whose main unit, less-than-truckload carrier ABF Freight System Inc., is one of YRC's chief unionized rivals. The source did not know the extent of MAEVA's involvement.

Its founder, chairman, and CEO, financier Harry Wilson, was one of two directors picked by the Teamsters to sit on YRC's board. Wilson joined the board in July 2011.

Teamster officials, including General President James P. Hoffa, were unaware of MAEVA's participation until about two weeks ago, according to the source. Nor were union officials aware of the Feb. 20 agreement between YRC and MAEVA at the time it was consummated, the source said. The disclosure was made in the company's most recent annual 10-K filing with the SEC, dated Feb. 21.

YRC officials did not respond to requests for comment by press time.

According to the filing, MAEVA was to be paid $250,000 in monthly fees for the next four months from the date of the filing. The firm would also receive a maximum of $5.5 million in what YRC called "completion fees." The agreement expires on Dec. 31 unless extended by mutual consent or terminated by YRC with 30 days written notice, according to the filing.

Wilson, 41, worked for Goldman, Sachs & Co. and the Blackstone Group, two of the finance industry's heavyweights, and was then named partner at private equity firm Silver Point Capital before he retired at 36. He served on President Barack Obama's auto industry crisis task force and played a key role in the restructuring of General Motors Corp. after the automaker's bankruptcy filing.

Wilson did not return an e-mail request for comment.

Wilson was chosen to the board of YRC by the Teamsters in the wake of a major restructuring that kept YRC out of bankruptcy. The union, which represents approximately 25,000 YRC workers, was awarded two board seats as well as a chunk of YRC stock in return for wage concessions of 15 percent and a dramatic scaledown in the company's pension contributions. Overland Park, Kan.-based YRC was allowed to suspend pension contributions from mid-2009 until the start of 2011, when it resumed them at only one-fourth of its historical levels. The company isn't expected to restore full contributions until 2015 at the earliest.

The Teamster concessions were pivotal in saving YRC from a bankruptcy filing and possible dissolution at the end of 2009.

James Welch, who was named YRC's CEO in July 2011, met with Arkansas Best President and CEO Judy McReynolds on March 22 at Arkansas Best's headquarters in Fort Smith, Ark., to discuss a possible combination. In a March 25 letter to McReynolds, YRC's board and management is "very supportive of our desire to work with ABF in an attempt to move a transaction forward. We think our indication of consideration is appropriate and meaningful for the shareholders of ABF."

DC Velocity broke the story of the CEO meeting in its online edition last Wednesday.

Arkansas Best confirmed in a statement that evening that talks were held concerning a possible YRC buy-out of ABF. However, Arkansas Best said in the statement it had told YRC in early April that it wasn't interested in an involvement at the time. It cited, among other things, intense negotiations with the Teamsters over a new collective bargaining agreement with ABF that the company said was critical to its efforts to remain competitive. ABF has the highest labor costs in the LTL industry. The two companies have not communicated since April, Arkansas Best said in the statement. YRC confirmed in a statement on May 9 that it had approached Arkansas Best in March about buying the entire company, which would include not only ABF but Panther Expedited Transportation, the nation's second largest expedited transportation carrier behind FedEx Custom Critical, a unit of Memphis-based FedEx Corp. The source said YRC had made an informal proposal of $18 a share, which would value Arkansas Best at about $400 million based on the stock's closing price on Friday. "Our board and management believed then and believes now that the combination of Arkansas Best and YRC would be in the best interests of all employees, customers, and shareholders of both companies," Welch said in the YRC statement. In subsequent interviews with various media outlets, Welch defended the proposal as a sensible approach to increasing shipment density within the companies' networks. He also said that after spending two years revamping the company's operations to improve efficiencies and drive down costs, it was time to take a bold growth-oriented step. As of press time, Welch had not spoken to DC Velocity. Word of a possible buy-out was greeted harshly by the Teamsters, which also represent ABF workers. General President James P. Hoffa said in a statement Friday that it was "unconscionable" that YRC would move on a possible acquisition of Arkansas Best while the union and the LTL unit are in the midst of highly charged and sensitive contract talks. "This interference in the collective bargaining process is an affront to all of the hardworking men and women at both companies," Hoffa said. On May 3, ABF and the Teamsters' international union agreed on a tentative five-year contract. Leaders of Teamster locals representing ABF workers will meet early next week to review the proposal. If the locals approve it, the compact will be mailed to ABF's rank-and-file for a ratification vote. Channel: Transportation Classification: LTL, Labor Companies: Arkansas Best, YRC
Transportation Trucking
KEYWORDS ABF Freight System Inc. YRC Worldwide
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Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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