OVERLAND PARK, Kan. — The less-than-truckload (LTL) YRC fleet will receive a US $700 million loan through Covid-19 relief funds, giving the U.S. Treasury a 29.6% stake in the company.
While the loan is made through the Coronavirus Aid, Relief and Economic Security (CARES) Act – also used to help small businesses – these funds are meant to offer help businesses critical to national security.
YRC provides 68% of the LTL services used by the U.S. Department of Defense, the Treasury Department says.
The company’s stock had dropped 85% over the last five years, but jumped 75% on the news, CNN reports.
The bailout requires the fleet to maintain employment levels, and limit executive compensation. It will be used to pay for deferred healthcare and pension costs, and to support essential capital investment.
YRCW and its operating companies — Holland, New Penn, Reddaway, and YRC Freight – have been significantly impacted by Covid-19, the company says in a press release. Collectively, they have 30,000 trucking employees, including 24,000 Teamsters.
It reported in December that trucking tonnage was down significantly compared to the previous year.
“Our 30,000 employees have continued to serve hundreds of quarantined communities across the country during the pandemic, and this financial assistance will enable us to bridge this pandemic-related crisis and continue to provide essential shipping services for the nation’s supply chain,” said YRCW CEO Darren Hawkins. “The funding will also enable us to continue successfully implementing our multi-year strategic plan to transform our five powerful brands to operate as one company, one network, to better serve our customers and the nation’s supply chain as economic recovery takes hold.”
The loan matures on Sept. 30, 2024.
YRC’s existing credit facilities are expected to be amended to permit the new loan.
- This story originally appeared at www.truckinginfo.com, and is reproduced under an editorial sharing agreement between Today’s Trucking and Heavy Duty Trucking magazines.
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