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Yellow | YRC says downgrade forces collateralization moves

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Does Anyone know what this means?????????? Please don't just guess ! Thanks


YRC Worldwide says credit downgrade forces it to collateralize $1.5 billion in assets


OVERLAND PARK, Kan. (AP) -- Trucking company YRC Worldwide Inc. said Thursday that ratings downgrades will require the company to collateralize its real estate and revenue equipment, which it valued at $1.5 billion.
On Wednesday, Standard & Poor's cut YRC's debt rating three notches, citing the company's ability to comply with terms of its borrowing because of falling profits.

YRC said the downgrade to "B" from "BB" was considered a trigger event under its credit agreement, requiring it to collateralize remaining unencumbered assets, mostly real estate and equipment.

The company estimated one-time fees of collateralization would be $7 million to $10 million.

YRC said it can still enter into sale and leaseback transactions, dispose of excess facilities and complete debt-for-debt exchanges.

The S&P downgrade followed a similar move by Moody's Investors Service, which last week lowered its ratings for YRC to "B1" from "Ba2," and characterized its outlook as "Negative." Moody's cited weakness in the company's regional operations and exposure to the troubled U.S. auto industry.

"It is unfortunate that the economic environment and financial markets are causing these types of reactions," Chairman and Chief Executive Bill Zollars said. He said the "disappointing downgrades" don't change the company's plan to combine units.

In morning trading, shares of YRC Worldwide fell 35 cents, or 19.4 percent, to $1.45 after hitting a 52-week low of $1.20 earlier in the session.
 
Means there morgating what evers left that they can raise cash from might be more dire circumstances than the oldtimers want to admit we've hit the iceburg here get out while you can
 
according to websters dictionary it means "to make aloan secure by using company assets ie trucks. trailers. property to guarantee loan repayment". Said assets cannot be sold for profit, money must be reinvested or used to pay down loans.
 
weaseltone said:
according to websters dictionary it means "to make aloan secure by using company assets ie trucks. trailers. property to guarantee loan repayment". Said assets cannot be sold for profit, money must be reinvested or used to pay down loans.
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Thanks I never thought about the dictionary !
 
This means they HAVE to sell assets that the company owns out right to raise operating capital. This includes real estate & equiptment. The plan is then to lease back said assets & continue doing business as usual on the surface.


I've worked for three companies that went thru the same dog & pony show & all three ended in BANKRUPCY within a year of doing so. The company sells all of its asets, leases them back to operate for a short time. Once the balance sheet shows little or no assets & over bearing debt, the next stop is Federal Bankrupcy Court.

For more examples of this, "GOOGLE" CF, Consolidated Freightways, PIE, Willig Freight.
 
MSN Article

This may help.

YRC Worldwide clarifies impact of credit rating change Co announces the financial impact of yesterday's credit rating change from S&P. The credit rating is considered a trigger event under the credit agreement. This trigger event requires the company to collateralize its remaining unencumbered assets, which primarily include its real estate and revenue equipment. The company estimates the market value of these assets to be around $1.5 billion. Despite the collateralization of these assets, the company's potential to implement multiple strategic actions is not impacted, more specifically: 1) the company can enter into sale and leaseback transactions, including the collateralized real estate. Under the credit agreement, the first $150 million of proceeds from sale and leasebacks can be reinvested in the business or must be used to pay off its $150 million term loan. After repayment of the term loan, the company can use proceeds as it deems appropriate to manage the business; 2) the company can continue to dispose of excess facilities including the expected 150 properties from the integration of Yellow Transportation and Roadway; 3) the company can also complete debt-for-debt exchanges. To the extent the principal amount of the retired debt is greater than the amount paid, the difference would be recognized as a gain on extinguishment of debt and included in the company's earnings before interest, taxes, depreciation and amortization under the credit agreement.
 
bubbadog121 said:
This may help.

YRC Worldwide clarifies impact of credit rating change Co announces the financial impact of yesterday's credit rating change from S&P. The credit rating is considered a trigger event under the credit agreement. This trigger event requires the company to collateralize its remaining unencumbered assets, which primarily include its real estate and revenue equipment. The company estimates the market value of these assets to be around $1.5 billion. Despite the collateralization of these assets, the company's potential to implement multiple strategic actions is not impacted, more specifically: 1) the company can enter into sale and leaseback transactions, including the collateralized real estate. Under the credit agreement, the first $150 million of proceeds from sale and leasebacks can be reinvested in the business or must be used to pay off its $150 million term loan. After repayment of the term loan, the company can use proceeds as it deems appropriate to manage the business; 2) the company can continue to dispose of excess facilities including the expected 150 properties from the integration of Yellow Transportation and Roadway; 3) the company can also complete debt-for-debt exchanges. To the extent the principal amount of the retired debt is greater than the amount paid, the difference would be recognized as a gain on extinguishment of debt and included in the company's earnings before interest, taxes, depreciation and amortization under the credit agreement.
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Please my friend ENGLISH I'm just a poor truck driver !
 
Entering into a sale and leaseback transaction

I'm going to try to put this in perspective: You own your own home, you are about to be in foreclosure, so what you do is sell your house to your brother and still live there until you can afford to buy it back. If things turn to the worst, your brother owns the house and throws your sorry a## out.
 
wishy-washy said:
Entering into a sale and leaseback transaction

I'm going to try to put this in perspective: You own your own home, you are about to be in foreclosure, so what you do is sell your house to your brother and still live there until you can afford to buy it back. If things turn to the worst, your brother owns the house and throws your sorry a## out.
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OUTSTANDING Thanks I get it now ,Thanks again
 
With the stock becoming worthless and lack of credit in the market they have no money to spend in other words no big bonus at christmas for the bean counters since roadway owned most of the terminals they have become a cash cow in the merger
 
Redeye1620 said:
This means they HAVE to sell assets that the company owns out right to raise operating capital. This includes real estate & equiptment. The plan is then to lease back said assets & continue doing business as usual on the surface.


I've worked for three companies that went thru the same dog & pony show & all three ended in BANKRUPCY within a year of doing so. The company sells all of its asets, leases them back to operate for a short time. Once the balance sheet shows little or no assets & over bearing debt, the next stop is Federal Bankrupcy Court.

For more examples of this, "GOOGLE" CF, Consolidated Freightways, PIE, Willig Freight.
Click to expand...


Commercial Lovelace is another example of this. They sold their assets and then leased them back before going out of business.
 
Biggest question is who wants to buy their old azz equipment and then loan it back to them??????????????
I can see getting a few hundred per trailer but come on really
 
i hate to say it. but sure looks like the same path cf took. and if the stockholders bring[ john b ] in i know it over sure hope they get off this trail.
 
It means the real estate that was owned outright must be used as collateral on the debt. When they go out of business the real estate will belong to the lender
 
The managers at UPS were in all day meetings regarding strategy plans in case anything happens with Yellow in the next few months. A supervisor I was talking to said that they have had their engineering departments taking surveys of all Yellow, Roadway and New Penn facilities for possible purchase if anything should occur. If they were in all day meetings on this then they must know something is up. I hope you guys pull through.
 
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