Update on YRCW
November 2, 2009
On October 30th YRCW issued their financial results for the third quarter. This report highlighted the challenges that YRCW faces as well as the progress the company has made in addressing these challenges.
In addition to the earnings report for the third quarter, on Nov. 2nd the company announced that its lenders agreed to an interest abatement on a portion of their debt. This initiative is being taken in conjunction with a debt for equity swap that is intended to clean up YRCW's Balance Sheet. That said, one of the most frequently asked questions we received during 2009 has been: “Is YRCW going to make it?”
On the surface, it would appear that the company has taken a significant step towards stabilizing its financial platform. But instead of trying to decipher what is in these announcements, we went directly to the source and interviewed Bill Zollars, YRCW Chairman and CEO, for an exclusive On the Record session with TranzAct.
During the interview, Bill highlighted the fact that the company has been, and continues to be, executing part of a comprehensive plan to restructure YRCW so they can compete in the current and future economic environment. Obviously, this has been a daunting task, but theYRCW Quarterly Earnings Report highlighted some of the reasons for their optimism.
Over the past couple of months I have spoken at numerous industry events and have been interviewed by several publications about YRCW. In these talks and interviews I have emphasized the fact that the marketplace has failed to give YRCW credit for the steps it has taken under its comprehensive plan. Candidly, not too many people would have been willing to bet that YRCW could acquire the concessions has gotten from its lenders and the Teamsters in order to remain in business, or that they would be able to successfully consolidate the Yellow and Roadway networks.
But the company has defied the prognosticators and has, thus far, navigated treacherous waters. Additionally, we believe that shippers benefit from the competition amongst LTL carriers. That is why we have not been shy in pointing out that we believe were there no YRCW, everyone's LTL rates would rise.
Going forward it is important to note that YRCW and its competitors face a weak and uncertain freight environment. No one is ready to predict how the economy will look in 2010. If the lenders agree to this debt for equity swap it will go a long way in enabling YRCW to regain some of the market share it has lost due to their financial concerns.
I encourage you to listen to our interview with Bill and draw your own conclusions.
That's it for now.
Mike Regan
TranzAct Technologies
Send Mike an e-mail
