I come back to the stock price. Why didn’t YRC buy ABFS when the company was trading at less than $6.50 a share? You look at the individual, Harry Wilson, and see what he has done in the past. And assume he can continue to do that. I say all circumstances are different and turning a company like YRC around is different than working on Obama’s car commission. Take a close look at YRC’s finances. They have not made a profit since 2008. They cut operating expenses and, finally, made an operating profit. But that profit was before they started paying their dept. After they made the payments on their loans the profit was gone and YRC was still loosing money. The operating profit was not enough to cover the expenses of their loans. And you think Harry Wilson will be able to convince investors to lend YRC more money to buy ABFS? You could be right, I have seen stranger things. But, the T/A is still horrible and there is still the question of why ABFS lost money in 2012 after achieving profitability in 2011.
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I come back to the stock price. Why didn’t YRC buy ABFS when the company was trading at less than $6.50 a share? You look at the individual, Harry Wilson, and see what he has done in the past. And assume he can continue to do that. I say all circumstances are different and turning a company like YRC around is different than working on Obama’s car commission. Take a close look at YRC’s finances. They have not made a profit since 2008. They cut operating expenses and, finally, made an operating profit. But that profit was before they started paying their dept. After they made the payments on their loans the profit was gone and YRC was still loosing money. The operating profit was not enough to cover the expenses of their loans. And you think Harry Wilson will be able to convince investors to lend YRC more money to buy ABFS? You could be right, I have seen stranger things. But, the T/A is still horrible and there is still the question of why ABFS lost money in 2012 after achieving profitability in 2011.
I have wondered about the T/A myself. With so many cuts and infringements in the T/A it does seem that management and the union are trying to get us to vote it down. Any idea why?
I think ABF management is serious when they say there will be no more negotiations if this contract is voted down. A YRC buyout of ABF would remove the liability of the pension obligation that has been like an albatross. The Board of Directors won't allow the stock to become a penny stock like YRC. Their obligation is to the stock holders. Whatever the company sold for now would be better than assuming a huge debt which would lower the stock value even more. The investors would take whatever they have & invest in some stock that would make a profit. That is why they invest.
YRC is probably the only company with an interest in the company. They would inherit ABF's good accounts & keep part of other customers. YRC has almost three years left on the 15% wage & 25% pension contribution agreement. They would make quite a profit for three years. They would probably need to hire a small percentage of ABF employees even when they called all of their laid off employees back. Since there would be no existing contract at ABF the new employees would be hired at the new hire rate & would have no vacation earned. I doubt that YRC will ever again pay the full pension benefits like ABF has been doing.
At first I didn't think YRC would be able to get financing for a purchase but ABF has little debt & owns a lot of property which the lenders would like to get their hands on. I can see how it would be easy to get financing with real estate for collateral.
As for ABF top level management they have golden parachute clauses in their contracts which would give them an option for a job with the purchaser or a huge cash/stock settlement. Judy McReynolds who so many on this board despise would move on to a job which would probably pay more than the job she has now. The only thing top level management would lose is not having the satisfaction of seeing the survival of the company they have devoted most of their lives to.
YRC is probably the only company with an interest in the company. They would inherit ABF's good accounts & keep part of other customers. YRC has almost three years left on the 15% wage & 25% pension contribution agreement. They would make quite a profit for three years. They would probably need to hire a small percentage of ABF employees even when they called all of their laid off employees back. Since there would be no existing contract at ABF the new employees would be hired at the new hire rate & would have no vacation earned. I doubt that YRC will ever again pay the full pension benefits like ABF has been doing.
At first I didn't think YRC would be able to get financing for a purchase but ABF has little debt & owns a lot of property which the lenders would like to get their hands on. I can see how it would be easy to get financing with real estate for collateral.
As for ABF top level management they have golden parachute clauses in their contracts which would give them an option for a job with the purchaser or a huge cash/stock settlement. Judy McReynolds who so many on this board despise would move on to a job which would probably pay more than the job she has now. The only thing top level management would lose is not having the satisfaction of seeing the survival of the company they have devoted most of their lives to.
nothumbleenough
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No, no, no! I said before Obama's Car commission. Specifically his time at Silver Point as a hedge fund trader and at Goldman Sachs working in private equity where he became a millionaire many times over. This man is a deal maker and guys with this type resume don't usually have much of a conscious either!
Why do you think they're paying him 500k a month to pursue such a deal considering how broke they are? How does this look for Hoffa considering he personally selected Wilson?
The 15 percent and so on expires in less than 2 years. April 1, 2015.
Thanks for the correction. I had my dates mixed up.
D
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I beg to differ with you on a few things here:
1) Real estate is only worth what someone is willing to pay for it and as it seems to me that it YRC already owns a bit that cannot be sold.
2) YRC will not retain the customers we serve should they buy ABF out, that lesson should have well been learned when ABF bought out Carolina. The customers know of YRC and use other carriers because they want to.
3) While I won't claim to know for certain I don't see ABF's workforce being thrown out in the event of a YRC buyout. I see a dovetailing of the work force.
P.S. Am I hearing that this is the company's 'Last and Final Offer"? I haven't heard that before.
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Real estate is probably the main interest lenders would have in a freight line. Even the newer equipment would be of little interest to anybody but another LTL carrier. ABF has some very desirable property.
ABF has some very good contracts which like liability would be assumed by whoever the buyer is should there be a buyer.
When ABF bought Navajo, ETMF & Carolina/Worldway they were obligated to fulfill the contracts. All of the carriers ABF bought had some contracts that were not profitable. The company kept their commitment to the customer & in some cases were able to renegotiate after the contract expired. Carolina had the contract to supply the Olympics in Atlanta & was designated as "The Official Carrier of the Olympics". This contract sounded good but was in fact was a loser. Deliveries were made at night because Atlanta traffic was even worse than normal. Usually when a carrier gets in financial trouble it hauls low paying freight for cash flow. To my knowledge ABF has rarely moved freight that was not profitable.
As best I remember ABF retained about 30% of the customers from most of the acquisitions. YRC could make a profit on many of ABF's accounts because of their lower labor costs. ABF has been able to survive in part because of better service even with higher freight rates than the competition. U-Pack has also been a factor in the survival of ABF.
ABF has some very good contracts which like liability would be assumed by whoever the buyer is should there be a buyer.
When ABF bought Navajo, ETMF & Carolina/Worldway they were obligated to fulfill the contracts. All of the carriers ABF bought had some contracts that were not profitable. The company kept their commitment to the customer & in some cases were able to renegotiate after the contract expired. Carolina had the contract to supply the Olympics in Atlanta & was designated as "The Official Carrier of the Olympics". This contract sounded good but was in fact was a loser. Deliveries were made at night because Atlanta traffic was even worse than normal. Usually when a carrier gets in financial trouble it hauls low paying freight for cash flow. To my knowledge ABF has rarely moved freight that was not profitable.
As best I remember ABF retained about 30% of the customers from most of the acquisitions. YRC could make a profit on many of ABF's accounts because of their lower labor costs. ABF has been able to survive in part because of better service even with higher freight rates than the competition. U-Pack has also been a factor in the survival of ABF.
A NO vote means that stock price goes down and anybody can buy ABF. A YES vote will probably push ABF stock upward and will be to expensive to acquire. The stock holders can make that decision, We just along for the ride. When YRC approached ABF the stock price was way down and all possibilities were open. If you think a bankrupted company cant buy an other company look what K-Mart did with Sears. Now there both going down the crapper! GOOD LUCK to everybody.
nothumbleenough
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I would strongly agree with you about YRC retaining little if any of our customer base. They are using the cheap freight business model and that doesn't mesh with the more specialized customer base we have.
The real estate is important especially for the lenders but is mainly about our well maintained equipment and the roughly 125 million of cash on hand.
D
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And who has need for that spiffy home office in Ft. Smith?
A quick question; where did you find that Harry Wilson is making $6 million a year ($500k *12). I see where CEO James Welch is earning $977K and CFO James Pierson is earning $1.2M but not where Harry Wilson is earning $6M. I see that he is on the board but not the $$$ you are talking about. Could you post a link to where you got that info?
Actually $1 million for four months... But with a possible windfall if the deal goes through...
According to a Feb. 21 filing with the Securities and Exchange Commission (SEC), MAEVA signed a contract with YRC, effective Feb. 1, to perform advisory services in "connection with one or more potential transactions and/or strategic initiatives" that YRC may pursue.
According to the filing, MAEVA is to be paid $250,000 in monthly fees for the next four months from the date of the filing. The firm would also receive a maximum of $5.5 million in what YRC called "completion fees." The agreement expires on Dec. 31 unless extended by mutual consent or terminated by YRC with 30 days written notice, according to the filing.
MAEVA is Harry Wilson's company. Here is the link to the whole story... Hoffa, other Teamster leaders unaware of YRC-ABF talks until late April, more than month after CEOs met – DC Velocity
nothumbleenough
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YRCW-2012.12.31-EX10.37
250k per month starting in February. Then, a completion fee of 5.5 million. Please review line 14 c. Think they're serious about it now?
vongrimmenstein
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The man has a whole lot of reasons to complete a deal. 5.5 million reasons based on that contract. Talk about a bonus, I now realize why I should have gone to Harvard instead of the Concrete School of Transportation.
Thanks nothumbleenough . I think I am reading this a little differently than you and grovercxl are. I read the SEC filing (headache time) as a financial solution. The TDU [http://www.tdu.org/news/hoffas-yrc-board-appointee-paid-250000-month] is reading this the way I am. They see this as a ‘clumsy bid to buy ABF for 461 million.” And $461M is book value for ABFS. Take $461M divide by 25.5m shares equals $18 a share. And $18 a share is ABFS’s book value according to yahoo finance. Which brings me to last November when the stock was selling for $6.43 a share, total stock value at that time was $164m. So Harry Wilson is advising YRCW to buy ABFS for $461m when they could have purchased all the ABFS common shares for a total of $164m. Why suggest paying triple what the company can be bought for on the open market? But, to pay $1m to get both companies favorable contracts with ABF now and YRC 2yrs later might be worth it. Anyway, that is my thinking on Harry Wilson.
nothumbleenough
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Everything should be measured in its proper context and that context relates to YRC wasting money. Yes they could have paid a lot less months ago but that won't stop them from buying us for triple the price next week considering their ability to waste money.
My point stands, Harry Wilson is getting paid many millions of dollars to put this deal together and YRC ownership of ABF more of a possibility than "no voters" are willing to admit.
Do you think YRC ownership would be good for any ABF Teamster? It's not too late to change your vote.
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I will have to consider that question for a moment. I think it will depend on where an individual is on the board. Those with 20 or more years will get more work options. YRC would become a more stable company. Freight completion would be reduced. It would be easier to get rid of excess management. But, NO I don’t think it would be a good thing for anyone. I also don’t believe there is more than a 1/1000 chance it will happen.
I agree the T/A is garbage and I voted No. I am also trying to be one of the individuals who will witness the counting of the ballots so that I am sure the count is fair. But, we have just about beat the T/A to death and there is nothing left but speculation. And so we speculate about the consequences of our decision.