YRC Worldwide Inc. confirmed its previously announced expectation that the company will achieve positive adjusted EBITDA on a consolidated basis and positive operating income for its Regional Transportation segment for second quarter of 2010. While the company expects positive adjusted EBITDA for the quarter, it also expects its working capital expenditures, cash interest, adviser fees and other payments to produce a net cash usage from operating activities.
The company also reported that it has amended its asset-backed securitization facility to modify certain calculations to reduce the impact of negative effects that the integration of Yellow Transportation and Roadway has had on the ability of the company to borrow under the facility. As a result of this amendment, the company will be able to borrow additional amounts under the facility during the remainder of the second quarter. As of June 11, the incremental availability under the ABS facility after giving effect to these modifications would have been $22 million.
“We continue to see positive developments in our business as our June volume trends are exceeding our May volume trends,” says Bill Zollars, chairman, president and chief executive officer of the Overland Park, Kan.-based company. “The incremental liquidity from the ABS amendment helps to support our working capital needs as we grow our revenues.”
Driven primarily by the need to fund working capital for business growth, the expected net cash usage from operating activities creates liquidity pressure for the company. In addition to the liquidity that the amendment to the ABS facility provides, the company is seeking to address its short-term liquidity needs through a combination of one or more of the following actions:
• Implementing further cost actions and efficiency improvements;
• Seeking additional and return business from customers;
• Engaging in discussions with the company’s lending group under its credit agreement;
• Pursuing the sale of nonstrategic assets or business lines;
• Actively managing receipts and disbursements, including amounts and timing, focusing on reducing day’s sales outstanding and managing day’s payables outstanding;
• Pursuing the company’s litigation against the trustee under the indenture related to the company’s 5 percent contingent convertible notes. If the company is successful in its litigation and meets the closing conditions under a note purchase agreement to sell and issue additional 6 percent convertible notes, the company can utilize the remaining $20.2 million of proceeds held in an escrow for general corporate purposes; and
• Considering the sale of additional equity or pursuing other capital market transactions.
