Since 2007, YRC Worldwide (YRCW) has had two recapitalizations. The story of YRCW can be divided into two parts: the pre-2011 era and the post-2011 era. The company’s former CEO, Bill Zollars, left the company in 2011 along with the chief finance officer, chief operating officer, chief accounting officer, and chief marketing officer. James Welch, who departed the company in 2007, returned in 2011 to become its CEO.
The 2011 restructuring
In 2010, YRC Worldwide (YRCW) started the business restructuring. The next year, YRCW completed its financial restructuring and noted that it issued a “substantial number of shares of our common stock.” It also issued $140.0 million, 10% Series A Convertible Senior Secured Notes due in 2015, as well as $100.0 million of Series B Notes. In the same year, the company executed its Amended and Restated Credit Agreement.
In 2011, the new board of directors included two nominees from the International Brotherhood of Teamsters (or IBT). Each of YRCW’s operating subsidiaries has employees who are represented by the IBT. The company’s workforce is dominated by these employees. Over half of YRCW’s operating costs are represented by salaries, wages, and employee benefits costs. In 2011, the IBT waived its right to terminate and also agreed not to further modify the Agreement for Restructuring of YRC Worldwide (YRCW).
YRCW divested its truckload business, YRC Glen Moore, in December 2011. In the beginning of 2012, it shut down the formerly acquired Roadway’s headquarters and rebranded YRC Freight. YRCW sold off its non-core assets, which included Shanghai Jiayu Logistics, the leading LTL ground transportation service in China. In the same year, YRCW auctioned its excess real estate property.
To improve the ground level situation, the company made an attempt to buy rival Arkansas Best Corporation in 2013. However, the latter rebuffed the proposal. In the LTL market, YRCW prominently competes with Old Dominion Freight Line (ODFL), SAIA Inc. (SAIA), XPO Logistics (XPO), and FedEx Freight (FDX).
Investors interested in the transportation space can consider the SPDR S&P Transportation ETF (XTN). This ETF holds up 24.9% in major trucking companies and 12.6% in major US railroads.
In the next part, we will take a look at YRCW’s financials at the operating level.