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Congressional Panel Questions $700 Million Loan to YRC Worldwide
Loan to trucking firm was the first made from $17 billion Cares Act fund for businesses critical to national security
The federal loan sent trucking company YRC’s shares soaring 75% after it was unveiled July 1.
Photo: Paul Page/THE WALL STREET JOURNAL
By Paul Kiernan
Updated July 20, 2020 1:58 pm ET
WASHINGTON—A bipartisan panel of legislators raised questions Monday about the Treasury Department’s decision to designate trucking company YRC Worldwide Inc. as critical to national security and lend it $700 million in coronavirus-relief funds.
The loan, which sent YRC’s shares soaring 75% after it was unveiled July 1, would give the government a 29.6% equity stake in the company. It was the first to be made from a $17 billion pot of money created by the Cares Act for businesses critical to national security.
YRC didn’t meet Treasury’s standards for identifying such businesses, which usually must have either high-priority defense contracts or top-secret security clearance, according to a report by the Congressional Oversight Commission.
Instead, the company qualified “under a catch-all provision created by the Treasury…based solely on a recommendation and certification from the Secretary of Defense or the Director of National Intelligence,” the report said.
The commission said it plans to investigate the decision “in part, because the risk of loss of U.S. taxpayer money on this loan appears high.”
The company’s shares were down 27% on the Nasdaq Stock Market on Monday afternoon.
YRC, based in Overland Park, Kan., is the fifth-largest U.S. trucking company by revenue. It does business with the Defense Department by delivering food, electronics and other supplies to military locations around the country, in addition to serving some 200,000 industrial, retail and commercial customers. The commission said “it is far from clear” that such activities make YRC eligible for a lending program that was designed with companies such as Boeing Co. in mind.
(continued)
Loan to trucking firm was the first made from $17 billion Cares Act fund for businesses critical to national security
The federal loan sent trucking company YRC’s shares soaring 75% after it was unveiled July 1.
Photo: Paul Page/THE WALL STREET JOURNAL
By Paul Kiernan
Updated July 20, 2020 1:58 pm ET
WASHINGTON—A bipartisan panel of legislators raised questions Monday about the Treasury Department’s decision to designate trucking company YRC Worldwide Inc. as critical to national security and lend it $700 million in coronavirus-relief funds.
The loan, which sent YRC’s shares soaring 75% after it was unveiled July 1, would give the government a 29.6% equity stake in the company. It was the first to be made from a $17 billion pot of money created by the Cares Act for businesses critical to national security.
YRC didn’t meet Treasury’s standards for identifying such businesses, which usually must have either high-priority defense contracts or top-secret security clearance, according to a report by the Congressional Oversight Commission.
Instead, the company qualified “under a catch-all provision created by the Treasury…based solely on a recommendation and certification from the Secretary of Defense or the Director of National Intelligence,” the report said.
The commission said it plans to investigate the decision “in part, because the risk of loss of U.S. taxpayer money on this loan appears high.”
The company’s shares were down 27% on the Nasdaq Stock Market on Monday afternoon.
YRC, based in Overland Park, Kan., is the fifth-largest U.S. trucking company by revenue. It does business with the Defense Department by delivering food, electronics and other supplies to military locations around the country, in addition to serving some 200,000 industrial, retail and commercial customers. The commission said “it is far from clear” that such activities make YRC eligible for a lending program that was designed with companies such as Boeing Co. in mind.
(continued)