U.S. Treasury to Lend $700 Million

YRC Worldwide Expects To Receive $700 Million CARES Act Loan from U.S. Treasury

YRCW and its operating companies Holland, New Penn , Reddaway, and YRC Freight have been significantly impacted by the COVID-19 pandemic. These companies collectively employ 30,000 trucking professionals, including 24,000 Teamsters. The CARES Act assistance will be used to pay for deferred employee healthcare and pension costs and other contractual obligations as well as to support essential capital investment.

Transaction Terms
YRCW has entered into an agreement on June 30th under which UST will receive 29.6% fully diluted equity ownership in YRCW (pro forma for dilution from the UST equity issuance), described in further detail below, in connection with the loan from UST to YRCW .

YRCW will receive a loan of $700 million in two tranches, subject to completion of definitive documentation:

Tranche A of approximately $350 million, will be used to cover short-term contractual obligations and certain other obligations including pension and healthcare payments. The loan terms are LIBOR plus 3.5%, consisting of 1.5% cash and 2.0% payment in kind. This loan matures on September 30, 2024.

Tranche B of approximately $350 million, will be used for essential capital investment in trailers and tractors and is expected to carry an interest rate of LIBOR plus 3.5% in cash. This loan also matures on September 30, 2024.
YRC’s existing credit facilities are expected to be amended to permit the new loan.

The material terms of the equity issuance agreement, the loan from U.S. Treasury, and the amendments to the existing credit facilities will be available in a Form 8-K which will be filed with the Securities and Exchange Commission (SEC).

The U.S. government plans to lend $700 million in coronavirus stimulus funds to trucking firm YRC Worldwide Inc ., in exchange for a 29.6% equity stake in the company, the Treasury Department said Wednesday.

The Trump administration just lent $700 million to a trucking company sued for ripping off taxpayers

Long-term competitive problems had taken the company's stock down 85% over the last five years. But shares of YRC ( YRCW ) shot up 60% in early trading on the news of the bailout.

The loan is not part of the federal CARES Act meant to help small businesses. Instead, it is meant to provide help to businesses critical to national security. Treasury's statement said the loan was justified by the fact that the company provides a majority of the trucking services moving pallet-sized shipments of freight for the US military, a segment of the industry known as "less-than-truckload" or LTL .

"Treasury's determination was based on a certification by the Secretary of Defense that YRC is critical to maintaining national security,"

On June 9, YRC warned that its per-day shipments were down 20% in the quarter, and the rates it was receiving per pound of freight moved were down 6%, compared to a year earlier.

he company has 30,000 employees, of whom 24,000 are represented by the Teamsters union. About half the loan money will be used to cover short-term contractual obligations, including pension and healthcare benefits. The loan will be due in 2024.

"Our 30,000 employees have continued to serve hundreds of quarantined communities across the country during the pandemic and this financial assistance will enable us to bridge this pandemic-related crisis and continue to provide essential shipping services for the nation's supply chain,"


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