YRCW: This Cat’s Got More Lives - Stocks To Watch Today - Barrons.com
Beleaguered transportation logistics firm YRC Worldwide (YRCW), despite appearing to be on the ropes with its proposed debt-for-equity swap, and facing a possible bankruptcy, could still come out okay, according to a couple of analysts following the company.
David Silver of Wall Street Strategies and Lee Klaskow of Longbow Research both think the company will come up with a way to secure the support of bondholders who’ve not yet fully committed themselves to exchanging their notes for shares. Those hold-outs are believed to be looking to get more in a bankruptcy filing, on the order of 50 cents on the dollar versus what may amount to 20 cents on the dollar for the offer YRC is making.
It’s possible YRC may offer preferred shares or dividends to entice the remaining holdouts, says Silver in a phone interview this morning, without claiming any privileged knowledge of YRC’s intentions. Bondholders hoping to clean up in bankruptcy are somewhat naive, he believes. “The bankruptcies of General Motors and Chrysler this year were a turning point for bankruptcy in this country,” says Silver. “Courts have shown themselves to be very sympathetic to companies.”
Klaskow says the bankers who hold $106 million in extra financing will help YRC do what it has to do to close the deal, meaning, they might consent to have YRC lower the threshold of the number of bondholders who need to commit to make the deal go through.
“The bankers don’t want YRC to go bankrupt,” says Klaskow. “What has happened in past with asset-intensive companies, like LTLs, that go bankrupt, is that there’s a kind of run on the bank, where customers flee in droves. The bankers [backing YRC] don’t’ want that to happen, and they’ll do what they have to [to make the deal happen.”
Klaskow has a “Neutral” rating on YRC and thinks Old Dominion Freight Line (ODFL) is a better bet for investors. Silver has a “Buy” recommendation on YRC and a $1.50 price target.
Whatever the case, both seem to think YRC will get its deal done. “It’s sort of like a cat with nine lives; YRC has a couple of lives left,” says Silver.
YRC shares today are down 3 cents, or 3%, at $1. Old Dominion stock is off 61 cents, or 2%, at $33.10.
Beleaguered transportation logistics firm YRC Worldwide (YRCW), despite appearing to be on the ropes with its proposed debt-for-equity swap, and facing a possible bankruptcy, could still come out okay, according to a couple of analysts following the company.
David Silver of Wall Street Strategies and Lee Klaskow of Longbow Research both think the company will come up with a way to secure the support of bondholders who’ve not yet fully committed themselves to exchanging their notes for shares. Those hold-outs are believed to be looking to get more in a bankruptcy filing, on the order of 50 cents on the dollar versus what may amount to 20 cents on the dollar for the offer YRC is making.
It’s possible YRC may offer preferred shares or dividends to entice the remaining holdouts, says Silver in a phone interview this morning, without claiming any privileged knowledge of YRC’s intentions. Bondholders hoping to clean up in bankruptcy are somewhat naive, he believes. “The bankruptcies of General Motors and Chrysler this year were a turning point for bankruptcy in this country,” says Silver. “Courts have shown themselves to be very sympathetic to companies.”
Klaskow says the bankers who hold $106 million in extra financing will help YRC do what it has to do to close the deal, meaning, they might consent to have YRC lower the threshold of the number of bondholders who need to commit to make the deal go through.
“The bankers don’t want YRC to go bankrupt,” says Klaskow. “What has happened in past with asset-intensive companies, like LTLs, that go bankrupt, is that there’s a kind of run on the bank, where customers flee in droves. The bankers [backing YRC] don’t’ want that to happen, and they’ll do what they have to [to make the deal happen.”
Klaskow has a “Neutral” rating on YRC and thinks Old Dominion Freight Line (ODFL) is a better bet for investors. Silver has a “Buy” recommendation on YRC and a $1.50 price target.
Whatever the case, both seem to think YRC will get its deal done. “It’s sort of like a cat with nine lives; YRC has a couple of lives left,” says Silver.
YRC shares today are down 3 cents, or 3%, at $1. Old Dominion stock is off 61 cents, or 2%, at $33.10.