YRC Worldwide expects to receive $700 million CARES Act loan from US Treasury

YRC Worldwide Inc., the nation’s second largest less-than-truckload (LTL) shipping company, today announced that the United States Department of the Treasury (“UST”) intends to provide a $700 million loan to YRCW under authorization provided by Subtitle A of Title IV of the CARES Act.

YRCW and its operating companies Holland, New Penn, Reddaway, and YRC Freight have been significantly impacted by the COVID-19 pandemic. These companies collectively employ 30,000 trucking professionals, including 24,000 Teamsters. The CARES Act assistance will be used to pay for deferred employee healthcare and pension costs and other contractual obligations as well as to support essential capital investment.

YRCW CEO Darren Hawkins stated, “We would like to thank Congress for passing the CARES Act and the U.S. Department of the Treasury for providing this vital funding which recognizes the essential role YRCW plays in the nation’s supply chain. Through our work with over 200,000 customers, including being a leading transportation provider for the Departments of Defense, Energy, Homeland Security, and Customs and Border Protection, YRCW’s freight professionals have developed a deep understanding of, and expertise in, the importance of a secure and reliable supply chain.
“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. 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.”
Transaction Terms
YRCW has entered into an agreement on June 30th under which UST will receive 29.6% fully diluted equity ownership in YRCW (pro forma for dilution from the UST equity issuance), described in further detail below, in connection with the loan from UST to YRCW.
YRCW will receive a loan of $700 million in two tranches, subject to completion of definitive documentation:
• Tranche A of approximately $350 million, will be used to cover short-term contractual obligations and certain other obligations including pension and healthcare payments. The loan terms are LIBOR plus 3.5%, consisting of 1.5% cash and 2.0% payment in kind. This loan matures on September 30, 2024.
• Tranche B of approximately $350 million, will be used for essential capital investment in trailers and tractors and is expected to carry an interest rate of LIBOR plus 3.5% in cash. This loan also matures on September 30, 2024.
YRC’s existing credit facilities are expected to be amended to permit the new loan.
The material terms of the equity issuance agreement, the loan from U.S. Treasury, and the amendments to the existing credit facilities will be available in a Form 8-K which will be filed with the Securities and Exchange Commission (SEC).
Equity Grant 
The Company has agreed to issue to the UST shares of common stock that, after the issuance, will constitute approximately 29.6% of the Company’s fully diluted common stock outstanding. The Company is relying on Nasdaq’s temporary COVID-related exception to its stockholder approval requirements. The Audit & Ethics Committee of the Board of Directors of the Company, which is comprised solely of independent, disinterested directors, expressly approved reliance on Nasdaq’s COVID-related exception and determined that the transaction is in the best interest of the Company’s stockholders.
UST will hold the shares of the Company’s common stock through a voting trust, which will be required to vote the shares in the same proportion as all other unaffiliated shares of the Company’s common stock are voted. The shares will be subject to certain transfer restrictions and the Company has agreed to register the shares for resale pursuant to a registration rights agreement.