YRC Worldwide stock rebounds to $6.32

Oct 09, 2008 (The Kansas City Star - McClatchy-Tribune Information Services via COMTEX) -- YRCW | Quote | Chart | News | PowerRating -- YRC Worldwide Inc.'s stock rebounded Wednesday despite the company saying it may take a charge on its various subsidiaries related to the recent market decline.

YRC, the Overland Park-based trucking giant, saw its stock climb back to $6.32 a share, up 27 percent. The stock had dropped to a one-year low of $4.98 at Tuesday's close.

Before trading began Wednesday, YRC said in a regulatory filing that it is examining the goodwill value of the company's national and regional trucking units and YRC Logistics given the current market environment.

Any charge taken would be a noncash charge and would not affect debt-level requirements of lenders, the company said.

That Securities and Exchange Commission filing Wednesday was preceded by a statement YRC issued late Tuesday reaffirming its financial condition. The company said it expected to have positive cash flow in the third and fourth quarters and expected to reduce debt significantly.

YRC also reiterated that it expects to remain in compliance with debt levels required by lenders.

Even after Wednesday's rebound, YRC's stock price has fallen 47 percent since Sept. 30 amid growing concern over the company's financial health. While short-term problems exist, a YRC bankruptcy does not appear to be imminent, according to a research report released Tuesday by Robert W. Baird & Co.

However, YRC violating its debt covenant on its credit agreement is possible, wrote Baird analyst Jon A. Langenfeld.

"While (a) fourth-quarter covenant violation is possible, several quarters of worsening trends are needed to force an outright bankruptcy," he said in the report. "Further, a covenant violation would likely precipitate a short-term waiver from lenders."

Langenfeld also noted that YRC's lenders would most likely not force a bankruptcy, given that the Teamsters union has a potential claim due to YRC owing $4 billion to its Central States Pension Fund that could take priority.

YRC has begun merging the operations of its two national trucking companies, Yellow Transportation and Roadway. The combined operations will be called YRC Inc.

To reach Randolph Heaster, call 816-234-4746 or send e-mail to rheaster@kcstar.com.

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