YRC extends exchange offer for contingent convertibles, 8½% notes

By Angela McDaniels

Tacoma, Wash., Dec. 9 - YRC Worldwide Inc. extended the exchange offer and consent solicitation for its contingent convertible notes and the 8½% guaranteed notes due April 15, 2010 issued by YRC Regional Transportation, Inc., formerly USFreightways Corp., to 11:59 p.m. ET on Dec. 15 from Dec. 8.

The offer was extended to provide additional time for all conditions to be met, according to a company news release.

The Securities and Exchange Commission is still reviewing the company's registration statement for the exchange offers, and noteholders had tendered 72% of the notes as of 11:59 p.m. ET on Dec. 8. The offer is conditioned on the receipt of at least 95% of the notes.

The contingent convertibles covered by the offer include YRC's 5% net share-settled contingent convertible senior notes due 2023, 3.375% net share-settled contingent convertible senior notes due 2023, 5% contingent convertible senior notes due 2023 and 3.375% contingent convertible senior notes due 2023.

The company expects to seek relief under the U.S. Bankruptcy Code if it is unable to complete the exchange offers and address its near-term liquidity needs, according to a form S-4 filed with the SEC on Nov. 9.

Holders are being offered 42 million shares of common stock and $250 million of class A convertible preferred stock in exchange for the notes.

For each $1,000 principal amount, the company will issue 77 shares of common stock and 9.167 preferreds in exchange for 5% convertibles, 74.690 shares and 8.892 preferreds in exchange for 3.375% convertibles and 79.310 shares and 9.442 preferreds in exchange for 8½% notes.

Holders will receive an additional 77 shares and 9.167 preferreds for each $1,000 of accrued interest through Dec. 9. Because the offer was extended, interest accrued beyond Dec. 9 will be deemed waived by holders who tender.

The company said it decided not to make the Nov. 25 interest payment due on the 3.375% convertibles.

If all holders participate in the offer, $536,837,000 principal amount of notes will be exchanged for a number of shares of common stock and preferreds representing 95% of YRC's outstanding common stock on an as-converted basis.

Each preferred will have a liquidation preference of $50.00 and will be automatically converted into 220.28 shares of common stock 18 months after stockholders approve the issuance of additional shares. This is equivalent to a conversion price of $0.227.

The preferreds will initially pay no dividends. If stockholder approval is not received, the preferreds will begin to accrue dividends at 20% per year.

YRC is also soliciting holders to become party to a mutual release and to consent to amendments that would remove substantially all of the material covenants from the indentures governing the notes other than the obligation to pay principal and interest and those relating to the conversion rights of the convertibles and to eliminate or modify the related events of default.

Holders who tender must become party to the mutual release and consent to the amendments.

Plans for the offer were announced Oct. 30, and it began Nov. 9.

In addition to the receipt of at least 95% of the notes, the offer is conditioned on the company remaining in compliance with the terms of its credit agreement and the ratification of the job security plan reached with the International Brotherhood of Teamsters.

The company needs to successfully complete the exchange offer in order to gain open access to its $106 million revolver reserve and to begin deferring payment of lender interest and fees of approximately $25 million per quarter under its recently amended credit agreement and asset-backed securitization facility.

Rothschild, Inc. (800 753-5151 or 212 403-3716) and Moelis & Co. LLC (866 270-6586 or 212 883-3813) are the lead dealer managers for the exchange offer. Global Bondholder Services Corp. (212 430-3774 for banks and brokers, others call 866 612-1500) is the information agent.

YRC is an Overland Park, Kan.-based provider of transportation services for the shipment of industrial, commercial and retail goods.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.