YRC Worldwide Inc. announced Friday, Feb. 20, that after its recently finalized bank amendment, a positive step was taken by one of the lead credit agencies. In addition, the company finalized additional sale and financing leaseback agreements with another investor.
Earlier this week, Standard & Poor’s revised the implications of its CreditWatch review on the company to positive from developing. Given the company’s new bank amendment, S&P stated it could raise the company’s ratings after further evaluation.
“We appreciate S&P’s initial perspective of our bank amendment and their willingness to evaluate its positive liquidity aspects,” said Tim Wicks, executive vice president and chief financial officer of Overland Park, Kan.-based YRC Worldwide.
In addition, the company said its operating subsidiaries signed agreements with Estes Express Lines to sell and simultaneously lease back certain facilities; the aggregate sale price is about $122 million, and the property sales are intended to close from March through June 2009. YRC Worldwide said the initial lease term for each facility is 10 years, with two 10-year renewal options to extend the term of each lease by up to an additional 20 years; the company will have a right of first offer if Estes decides to sell a facility during the first 36 months.
“We are pleased that we finalized another significant component of our liquidity initiatives,” Wicks said. “It is common practice in our industry to lease facilities from other industry providers, and in fact, we presently lease other facilities from Estes and they lease from us. This is a continuation of that relationship. We continue to have additional opportunities in this area with other investors, and recent improvements in this particular market have made them even more attractive.”
YRC Worldwide said its operating subsidiaries previously have entered into leases with Estes, as both landlord and tenant, and real estate sales contracts for the sale of excess properties; in addition, YRC Logistics uses Estes as a transportation service provider for its clients in the ordinary course of business.
Estes said this move gives it the ability to grow its investment network of real estate properties. “We have also worked with YRC over the years on many real estate transactions that have included the buying, selling and leasing of properties, which is common practice in the LTL industry,” said Angela Maidment, director of real estate and economic development for Richmond, Va.-based Estes. “This is a continuation of that mutually beneficial relationship, and now is a great time for us to make this kind of long-term investment.”