YRC Worldwide stakeholders OK with restructuring terms

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YRC Worldwide Inc. on Monday, Feb. 28, announced that it had reached an agreement in principle on nonbinding terms with certain key stakeholders providing for a comprehensive restructuring plan for YRC Worldwide. According to the company, a nonbinding term sheet was approved by those parties necessary to satisfy the “agreement in principle” condition in the company’s credit agreement, including the Teamsters National Freight Industry Negotiating Committee of the International Brotherhood of Teamsters and a more than two-thirds majority of the lenders under the company’s credit agreement.

YRC Worldwide says the nonbinding term sheet provides new and additional capital, a substantial improvement in its liquidity position, conversion of some of its debt obligations into equity and the replacement or restructuring of certain of its debt obligations. The term sheet also contemplates a substantial dilution of existing equity holders.

“The principal objective of the company was to achieve a comprehensive restructuring with a solid foundation for long-term success,” says John Lamar, chief restructuring officer and lead director of the Overland Park, Kan.-based company. “I believe the agreement in principle as represented by the term sheet will do just that. We appreciate both the support and confidence of our lenders and the dedication and sacrifice of our thousands of employees in their efforts to support the future success of YRCW.”

YRC Worldwide says the term sheet establishes a timeline to close the restructuring transaction by July and contemplates the extension of the previously announced deferral of interest and fees under the company’s credit agreement and ABS facility through the same period. The company says it also indicated that its lenders have waived the first-quarter 2011 EBITDA covenant in view of the harsh winter and as part of an anticipated revision in forward covenants under the new restructuring plan.

The company says it believes that this action represents a significant step in its restructuring and will continue to work with the parties that have approved the term sheet and other required parties to complete definitive documentation and satisfy any applicable closing conditions.