YRC officials would not disclose the financial impact of the deal, but John Lamar, chief restructuring office for YRC, said the deal would exceed a previous $470 million debt-for-equity swap.
"This is a very, very significant development for the company going forward," said Lamar. "There will be some of the debt obligations converted into equity, and there will be new liquidity and new capital brought into the company."
"It will form the basis for the company for I think the foreseeable future and will enable the company to achieve its growth plans and restore the company as a viable enterprise," Lamar said.
Under the terms of the deal, YRC's key lenders would receive a "significant majority" of the company's newly issued common stock and certain newly issued convertible secured notes maturing on March 31, 2015, that are convertible into additional shares of new common stock.
Virtually all pending financial obligations are being held in abeyance or are otherwise deferred until the restructuring is completed, the company said.
Shareholder approval is required, and the company anticipates such a vote in July, Lamar said.
YRC has been struggling for more than a year to stay out of bankruptcy, burdened by a heavy debt load, costly labor obligations and a sluggish business environment.
"This is an extremely important milestone for the company," said Dahlman Rose transportation analyst Jason Seidl.
"This is going to be a notable dilution for the equity holders. But ... this will probably give them (the company) ample breathing room."
Though no details were given, the company is expected to have to revise its corporate charter to allow the company to issue new shares above the 13 million shares currently allowed.
The restructuring marks the second such major overhaul for YRC's shareholders in less than 15 months. In December 2009 the company arranged a debt-for-equity exchange that wiped out $470 million of debt and opened credit lines for restructuring while giving noteholders 94 percent of the company's equity.
Union leaders said Monday they were firmly behind the deal, saying it will protect workers' jobs and health care benefits. The International Brotherhood of Teamsters will get two seats on a reorganized board of directors and "meaningful equity ownership" in the company for union members.
Last year, the union agreed to $350 million in labor concessions to help keep YRC afloat. (Reuters)
