YRC Struggles to Stay Alive

YRC Worldwide trucking is taking some last minute steps to struggle to stay alive as a going concern and out of bankruptcy. The key is a debt manipulations.

YRC has been suffering in this economy just like any trucking and transport company. The company has been laying off massive numbers of workers and cutting costs like mad, but it still has massive debt problems. The last count put the debt in the $550 million dollar range, and YRC has not been paying on much of it.


The issue before YRC and its debtors is whether the company can restructure and be profitable. The company thinks it can. Now we are about to find out if the debt holders do. YRC is attempting to alleviate its debt problems by exchange the outstanding amounts it owes for equity in the company. Yes, YRC will give away massive amounts of ownership interest to its debtors in exchange for them wiping away the debts owed.
Will this work? It is a very tough road to take. The company must get 95 percent of the debtors to agree to the plan. That is a huge hurdle to get over. You can get 95 out of 100 Americans to agree if it is night or day, much less exchange half a billion in debt for a position in a company that is in very bad shape.



So, what ultimately will happen? The truth of the matter is this is a desperation play by YRC. The chances of 95 percent of the debtors agreeing to the deal are minimal. Maybe YRC can pull it off, but I wouldn’t bank on it.

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