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Trucking co YRC Worldwide reaches deal to cut debt
Dec 23 (Reuters) - Trucking company YRC Worldwide Inc said it reached an agreement with some shareholders and institutional investors to reduce its debt by about $300 million.
Shares of YRC Worldwide jumped as high as 30 percent as the deal means it is much more likely that the company, on the verge of bankruptcy two years ago, can extend its restructuring program by four years until 2019.
YRC began restructuring in 2011, setting out to save $25 million-$30 million annually as it faces repayment of $1.36 billion of debt starting next year.
Under the agreement, investors will invest $250 million in cash at $15 per share for newly issued shares of the company that will be used to pay down debt due in 2014 and 2015.
Also, holders of around $50 million in convertible notes due March 2015 will convert the notes to stock at $15 to $16.01 per share, further bringing down debt, the company said.
“After shedding a significant portion of our non-core assets and operations and with the help of our unionized and non-unionized employees, we have focused our attention back to what we do best - North American LTL trucking,” Chief Executive James Welch said in a statement.
The company expects annual savings of $100 million under a refinancing plan, that will see no cuts in existing employees’ wages or pension and health benefits of about 26,000 workers.
YRC Worldwide proposed last month to extend its restructuring program to March 31, 2019 but needs the agreement of the Teamsters union by early January next year. (http://link.reuters.com/myj65v)
The proposal will be voted on by unionized staff by Jan. 8, said the Overland Park, Kansas-based company.
YRC shares hit a high of $20.58 before easing back to $18.31 in morning trading on the Nasdaq.
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