"The execution of this refinancing is an important milestone for YRC Worldwide and a critical next step in our journey. The service center closures are expected to generate cash proceeds of $25 million, with a similar amount in savings expected to come from the consolidation moves at its headquarters. It has already closed its New Lebanon, Pennsylvania, headquarters of regional unit New Penn Motor Express and consolidated corporate functions at its Overland Park, Kansas, headquarters. YRCW has been shuttering service centers with plans to close 25 facilities by the end of the year. However, the first $40 million in trucking terminal property sales is excluded. One hundred percent of the net cash proceeds from the sale or disposal of assets outside of its normal business operations are required to be returned as debt repayment. Importantly, the company is able to reinvest cash proceeds from specified property sales in the future. If YRC were to exceed $400 million in LTM EBITDA, it would receive a 1% step down in the term loan rate (to LIBOR + 6.5%). The new leverage covenant requires YRC to maintain last 12 months (LTM) earnings before interest, taxes and depreciation (EBITDA) of $200 million. The interest rate is lowered 100 basis points to LIBOR plus 7.5% and the new maturity is June 2024 (from July 2022). The new financing agreement eliminates annual principal amortization of 3%, which is estimated to save $18 million in cash annually. To successfully execute the company's multi-year strategy, it is essential we have a capital structure in place that provides added liquidity to invest in the initiatives we have planned and better positions the company to navigate through cyclical economic environments," said YRC's chief financial officer Stephanie Fisher. "The new term loan agreement provides the company with increased liquidity through the elimination of annual principal amortization and the ability to reinvest cash proceeds from certain property sales back into the business. The company believes this will provide an "operational runway" for its multi-year initiatives aimed at returning the less-than-truckload (LTL) carrier to sustained profitability. The new deal provides additional liquidity and provides less restrictive financial covenants. (NASDAQ: YRCW) announced that it completed a refinancing of its term loan debt, entering into a $600 million term loan agreement.
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