In a filing with the Securities and Exchange Commission dated April 13, 2009, YRC Worldwide Inc. said it is in discussions with the International Brotherhood of Teamsters (IBT) to provide company real estate as collateral to various pension funds in lieu of making payments or contributions for certain months.
YRC noted that, based on employment levels, which are in turn driven by freight levels and seasonal changes, it makes multi-employer pension contributions of $34 million to $45 million per month.
If agreed, YRC believes the transactions would have a positive impact on cash flow and financial performance and “whether the Company can maintain sufficient liquidity and earnings to remain in compliance with its Credit Agreement.”
Earlier in the year, YRC had announced a property sale and leaseback agreement with Estes Express Lines valued at an estimated $122 million. Based on the sequenced closings, YRC was to receive an estimated $25.6 million by the end of March and another $31.3 million by the end of May. The remaining $65.1 million is slated to close at the end of June. Terms of the leaseback deal called for YRC to pay an aggregate $11 million per year under a 10-year deal with Estes.
Prior to that, YRC struck a deal with NATMI Truck Terminals valued at $151 million. The first payment to YRC of $101 million was received January 30th with a second $50 million payment due later. YRC said at the time the proceeds would be used for operating purposes and the leases would be carried as long-term debt.
During an analyst briefing in early April, Bill Zollars, CEO, president and chairman of YRC Worldwide, and Tim Wicks, executive vice president and chief financial officer, reported the company had realized about $18 million in excess property sales in the first quarter of 2009 and still expected to see proceeds of $100 million in 2009, “mostly in [the] second and third quarters.”
Relative to sale/leaseback deals, they said YRC had closed approximately $155 million in the first quarter, $110 million with NATMI and $45 million “with other partners” which included $23 million with Estes. At that time, the YRC executives said they expected to close the remaining transactions with Estes in the second quarter. Though they said YRC would be working with other investors, the related SEC filing did not indicate YRC was considering striking a deal with the IBT on pension obligations.
YRC Worldwide will release earnings April 23rd after the market close.
