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11-04-2009, 05:37 PM
| | Capitalist Pig | | Join Date: Apr 2006 Location: S East
Posts: 14,533
| |  YRCW ($1.23; Sell) Market share losses, financial losses, and lender flexibility cont
Quote: - 3Q09 results: Tonnage per day declined 43% y/y at YRC National and 25% y/y at YRC Regional, as the LTL market remains sluggish and the company continues to lose market share over service issues, price competition and customer diversification efforts. Holland (cash-for-clunkers beneficiary) and New Penn were profitable, but Reddaway is still losing money mainly because they have not taken the wage/benefit concessions that most of the other union members have. YRC Logistics outperformed expectations, posting its best margins ever on cost cuts, pricing and some one-time benefits.
- Liquidity as of 9/30/09: $171mm but likely worse at end of October - updated monthly cash flow analysis in Exhibit 1 on page 2 of attachment. Assuming the note exchange goes through and banks remain forgiving, we believe the company may now not run out of cash in 2010 (we have previously said cash would run out by the end of 1Q10). We did not think the banks would waive interest and fees through 2010, but they will, if the debt exchange with bondholders is successful.
- Note exchange: The debt-for-equity swap is much more dilutive than we thought it would be, as the bondholders are essentially being given ownership of the company (95% of the total shares after exchange). Bondholders are essentially getting over 1.1bn share of YRCW for ~$550mm of debt. Full deal analysis on pages 3-4 of the attached note.
- This deal should be approved by bondholders, in our view. We are less sure existing shareholders will approve, but the company has a way around that (through a planned merger of YRC into a wholly owned subsidiary to effect the same result) if need be.
- We are maintaining our Sell rating on YRCW. The stock price should continue to fall through year-end toward a price below $0.50 ($0.23 is conversion price of preferred stock), in our view. We recommend investors looking to stay long the equity should sell the common stock and buy the bonds. Given the projected post-conversion diluted share count of 1.6bn, the company would have to have estimated annual net income of $2bn to justify its current share price – and that is just not going to happen.
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Last edited by Jeff; 11-05-2009 at 10:09 AM.
Reason: fixed images
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11-04-2009, 09:26 PM
| | yrc=your roasted cat | | Join Date: Apr 2006 Location: Texas ex YRC Driver
Posts: 2,775
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what does this mean: This deal should be approved by bondholders, in our view. We are less sure existing shareholders will approve, but the company has a way around that (through a planned merger of YRC into a wholly owned subsidiary to effect the same result) if need be.
How does one track the bond price and how do you purchase those notes?
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11-05-2009, 01:50 AM
| | Only Thinking Retirement. | | Join Date: May 2006 Location: Out in the West
Posts: 5,329
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Quote:
Originally Posted by truckinusa  what does this mean: This deal should be approved by bondholders, in our view. We are less sure existing shareholders will approve, but the company has a way around that (through a planned merger of YRC into a wholly owned subsidiary to effect the same result) if need be.
How does one track the bond price and how do you purchase those notes? | truckinusa 
I'm not sure you can buy these bonds on the open market.
I think this is just a way of giving the company to the current
bondholders while screwing the current stockholders.  |
11-05-2009, 09:54 AM
| | Veteran | | Join Date: Mar 2008 Location: sc
Posts: 251
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11-05-2009, 10:25 AM
| | clearing the ice slowly | | Join Date: May 2009 Location: CT
Posts: 1,328
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Unsecured bondholders won't get paid the 532 million owed to them. Shareholders will get wiped out. They are already wiped out. It's like the casino..there are a lot more ways to lose then to win.  Ya just can't win. YRC wins a jackpot they get rid of a half billion of ..  if it happens
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