Transportation services provider YRC Worldwide Inc. has reached an agreement in principle, in the form of a non-binding term sheet, with certain of its key stakeholders providing for a comprehensive restructuring plan for YRC Worldwide. The 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.
The non-binding term sheet provides YRCW with 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 contemplates a very substantial dilution of existing equity holders.
John Lamar, chief restructuring officer and lead director of YRCW, says that “the principal objective of the company was to achieve a comprehensive restructuring with a solid foundation for long term success. I believe the agreement in principle as represented by the term sheet will do just that.”
The term sheet establishes a timeline to close the restructuring transaction by July 2011 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 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 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.
