YRC Worldwide Inc. on Wednesday, Sept. 29, announced that its board of directors has approved a tentative agreement with the International Brotherhood of Teamsters, and the Teamsters approved submitting the tentative agreement to the company’s Teamster-represented employees for ratification. The agreement is designed to significantly improve the company’s competitive position in the marketplace and provides for re-entry into the multiemployer pension plans to which they contribute in a manner that provides member benefits while maintaining an improved competitive market position for the company. The ratification of the agreement by company’s employees represented by the Teamsters is targeted for completion by late October.
The company plans to amend its certificate of incorporation today, Sept. 30, to implement a reverse stock split with a ratio of 1:25. The reverse stock split, which will be effective on the Nasdaq exchange on Friday Oct. 1, will reduce the number of authorized common shares to 80 million from the current 2 billion and reduce the number of outstanding common shares to about 48 million from the current roughly 1.2 billion.
“The worst economic recession since the Great Depression continues to batter the trucking industry and threatens our YRCW members’ jobs,” says Tyson Johnson, Teamsters Freight Division director and co-chairman of the TNFINC. “While we recognize that this plan contains economic and work rule concessions that are difficult to accept, members need to fully understand that if this NMFA modification is rejected, there is no doubt this company will go out of business. This plan is far from perfect, but it will allow more than 25,000 Teamster families to continue to earn a paycheck, maintain healthcare coverage and preserve their pension benefits. The alternative is a YRCW bankruptcy that would be devastating to our members.”
The restructuring plan modifies and extends the current National Master Freight Agreement and Supplemental Agreements for a two-year period until March 31, 2015, and extends the current 15 percent wage reduction until that time. The plan calls for annual hourly rate and mileage rate increases (less the 15 percent reduction) of 40 cents on April 1, 2011; 45 cents on April 1, 2012; 40 cents on April 1, 2013; and 40 cents on April 1, 2014.
The plan delays until June 1, 2011, the date the company must resume pension contributions, and the new contribution rate will be 25 percent of the contribution rate that was in effect on July 1, 2009. The plan also requires the company to increase the contributions to the health and welfare funds by 35 cents per hour each year through March 2015. The plan reduces vacation amount by one week for all employees with four or more weeks of vacation, using the current method of computing vacation pay.
Johnson stresses that if the plan is approved, the union will be involved every step of the way as the company restructures. “We will have greater oversight with the addition of another board seat, and we negotiated strong language giving us access to financial records and key stakeholder discussions as the process moves forward,” Johnson said. “This company will only be viable with a reduced level of debt and new investors. The sacrifices of YRCW Teamsters set the stage for the company’s existing lenders to do their part and make this company an attractive investment for new investors. If our members ratify these concessions, they will only remain in place if there is significant level of debt reduction and new investment in the company. We will have access to these discussions when decisions are made. If our interests are not protected, we can pull our concessions back. This will keep everyone’s feet to the fire.”
YRC Worldwide announced Tuesday, Sept. 28, that William Zollars, chairman, president and chief executive officer, would retire upon completion of the company’s financial recovery plan. Zollars will retain his current positions through the finalization of the process and until a new CEO is named. The company says it will seek candidates from both inside and outside the organization.