YRC Worldwide Inc. has lined up $1.15 billion in loan agreements to refinance its debt load, according to a company spokeswoman.
The agreements are contingent upon the less-than-truckload (LTL) carrier's 26,000 unionized workers ratifying a five-year extension of the current collective bargaining agreement. The ballots are expected to be counted within the next 24 hours, and the results made public soon after that.
The refinancing package includes a $700 million term loan and a $450 million asset-backed component, according to the Bloomberg story. Both loans are due in five years, the report said.
YRC is saddled with $1.4 billion in debt, more than all other publicly traded LTL companies combined. The current loan agreements come with high borrowing costs that the company said has made it impossible to service its debt, pay salaries, benefits, and other expenses and still reinvest in the business.
YRC faces a Feb. 15 deadline on its first principal payment of $69 million. Its lenders have said they will not agree to a debt restructuring without an extended collective bargaining agreement in place.
Under the contract proposal, union workers would receive, in lieu of pay raises, $750 in annual bonuses over the first two years of the extended contract. The first bonus would be paid in early 2014 should employees ratify the contract extension and lenders agree to the debt restructuring.
After the first two years, workers would receive net annual raises equal to 34 cents an hour. Vacation pay would be capped at 40 hours per week or 1/58 of annual earnings. Three-week paid vacations would only be available to workers with 11 years seniority.
Pension contributions, which were suspended in mid-2009 and resumed in 2011 at one-fourth their prior amount, will be fixed at the current levels through the life of the extended compact.
Profit-sharing programs will kick in if YRC Freight, the company's struggling long-haul unit, achieves a 97-percent operating ratio per year starting in 2015. Workers will share in a larger percentage of profits should the unit's ratio decline further. For YRC's profitable regional units, profit sharing would begin at 94.1 percent. Operating ratio is the ratio of expenses to revenues and is a measure of a transport company's efficiency and profitability.
The contract would allow YRC to subcontract out up to 6 percent of its driver work, with protections for all currently employed drivers. Some drivers have voiced concern that the protections would only apply to the originating drivers on a multistop trip. As a result, "relay" drivers, those drivers other than the originating driver who pick up loads at various points, could have their work subcontracted out, they warn.
YRC CEO James L. Welch has said the use of subcontractors would be confined to markets like Chicago where the company faces a driver shortage. The practice will not be utilized to replace existing rank-and-file drivers, he said.
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