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Home » Hoffa, other Teamster leaders unaware of YRC-ABF talks until late April, more than month after CEOs met
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Hoffa, other Teamster leaders unaware of YRC-ABF talks until late April, more than month after CEOs met

May 15, 2013
Mark B. Solomon
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Teamsters union leaders, including General President James P. Hoffa, did not know until late April that YRC Worldwide Inc. had made an informal and unsolicited offer to acquire rival Arkansas Best Corp., even though the takeover proposal was discussed and approved weeks before by a YRC board that includes two members appointed by the Teamsters, according to a well-placed source.

One of those union-appointed members is Harry J. Wilson, a renowned financier who today is chairman and CEO of MAEVA Group LLC, a New York-based corporate restructuring firm. In February, MAEVA signed a potential multi-million dollar contract with YRC for advisory services in "connection with one or more potential transactions and/or strategic initiatives."

According to a Feb. 21 filing with the Securities and Exchange Commission (SEC), MAEVA signed a contract with YRC, effective Feb. 1, to perform advisory services in "connection with one or more potential transactions and/or strategic initiatives" that YRC may pursue.

According to the filing, MAEVA is 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.

The other Teamster-appointed member is Douglas O. Carty, co-founder and chairman of Switzer-Carty Transportation Inc., a Canadian company specializing in school bus transportation services.

In an e-mail today to DC Velocity, Wilson said his firm followed the proper legal guidelines in disclosing the agreement with YRC. Wilson added that the Teamsters were "directly informed of the retention" to ensure they were aware of it. He declined to comment on whether he notified the union at or around the time that YRC's board approved the buyout plan, citing confidentiality of board discussions.

In an e-mailed statement yesterday, YRC said the buyout offer was "fully vetted by its management and board," and it was their "mutual conclusion that it was very much in the interest of all shareholders and stakeholders."

According to the source, on or about April 29, the union became aware of a March 25 letter from James L. Welch to Arkansas Best President and CEO Judy McReynolds referencing a March 22 face-to-face meeting between the two executives to discuss a possible business combination. The meeting was held at Arkansas Best's corporate headquarters in Fort Smith, Ark.

The Teamsters, which also represent ABF workers, reacted angrily to word of the possible buyout. 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 ABF were 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.

The source said Hoffa was effectively blindsided by news of the takeover talks. Teamsters spokesman Galen Munroe said the union would have no comment beyond last Friday's statement.

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.

The Teamsters' biggest concern appears to be that without a ratified collective bargaining agreement in place, ABF workers would fall under a less-generous YRC compact if the two companies were combined. The union also worries that a merger would leave many of the 7,500 ABF Teamsters out in the cold because YRC workers would likely be chosen to fill the same job applied for by two candidates.

News of the takeover talk was first reported on DC Velocity's website last Wednesday. That evening, Arkansas Best issued a statement confirming it was approached in late March by YRC about a possible acquisition of ABF but told YRC in early April that it wasn't interested at that time. Arkansas Best cited, among other things, intense negotiations with the Teamsters over a new collective bargaining agreement with ABF that the company has said repeatedly would be critical to its efforts to remain competitive. ABF has the highest labor costs in the less-than-truckload (LTL) industry.

The companies have not spoken since early April, Arkansas Best said in its statement.

Welch said in a statement the next day that YRC wants to buy all of Arkansas Best, whose businesses include ABF—which accounts for about 80 percent of overall revenue—and Panther Expedited Services, the nation's second largest expedited transportation provider. According to the source, YRC floated an informal proposal for Arkansas Best of $18 a share. Near the close of trading on Wednesday, Arkansas Best's market capitalization stood at slightly more than $432 million.

Welch told other media outlets (he would not speak to DC Velocity) that a transaction would add significant traffic density to the combined LTL network. Welch added that after a two-year effort to revamp YRC's operations to improve efficiencies and drive down costs, it was time for the company to take a bold growth-oriented step.

WILSON'S ROLE?
What's unknown is the level of Wilson's involvement, if any, in a potential YRC-ABF transaction. Wilson, a renowned 41-year-old money manager, was chosen to YRC's board by the Teamsters in the wake of a major restructuring that kept YRC out of bankruptcy at the end of 2009. The union, which represents approximately 25,000 YRC workers, was awarded two board seats and a chunk of heavily diluted YRC stock in return for 15-percent wage concessions and a dramatic cut 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 historical levels. The company isn't expected to restore full contributions until 2015 at the earliest.

Wilson 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 retiring 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 mid-2009 bankruptcy filing.

Transportation Trucking Less-than-Truckload
KEYWORDS ArcBest YRC Worldwide
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    YRC, Teamster leaders agree to contract restructuring

    Modest progress reported in ABF, Teamster contract talks

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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