YRC Worldwide Inc., one of the nation's largest trucking companies, is disputing an analyst's prediction that it may be forced to close its doors as early as this weekend if it files for bankruptcy.
YRC, based in Overland Park, Kan., on Wednesday extended for the sixth time its offer to debt holders to exchange the debt for new equity stakes in the company. The offer, considered a key step in the company's effort to avoid a bankruptcy filing, now expires at midnight Wednesday. It would free up much-needed cash but would also make current shareholders' stakes virtually worthless.
The company said it made progress in its push to get a needed number of debt holders to swap their bonds for equity, though it still doesn't have enough to complete the swap ahead of a required $19 million interest and fee payment that must be made by Thursday.
YRC said in a regulatory filing earlier this month that its "liquidity position would become unsustainable" and it would be forced to file for bankruptcy protection if it doesn't get access to a $106 million standby credit line and doesn't win a waiver from its lenders allowing it to delay the $19 million payment.
If YRC does not complete the bond exchange, the company's last chance to avoid bankruptcy is a waiver from its lenders, according to Stifel Nicolaus analyst David Ross. If that doesn't happen, the company could file bankruptcy and close its doors as early as this weekend, he said.
Company spokeswoman Suzanne Dawson rejected that assumption. "The company will be open for business as usual on Monday," she said.
Iain Gold, Director of the Teamsters Strategic Research Department, said he believes the company will survive as well, noting the effort to convince bondholders that saving the company is in their best interest.
"We figured out how to get this far, so I think there's enough willpower and interest to get this over the goal line," Gold said. "We think it's in everybody's best interest to get this done outside of bankruptcy ... we believe the lenders will continue to work for it."
But Ross said even if a bankruptcy filing doesn't occur this week, it might not be far away.
"Whether or not the exchange goes through and the interest payment is made, we believe the company may still burn through all of its cash and borrowing capacity in the next two months, as customers are getting increasingly nervous about having their freight stranded in YRC's network," Ross said.
The last time a trucking company YRC's size went out of business was in 2002, after Consolidated Freightways filed for Chapter 11 protection. Less-than-truckload carriers like Consolidated and YRC, which consolidate shipments from many sources at company terminals, historically have not been able to keep their doors open after filing for bankruptcy because of their high fixed costs and customer defections.
YRC's shares fell 4 cents, or 3.9 percent, to close at 99 cents.