Here is some breaking news once again involving YRC. This is the bloomberg quote:
Dec. 17 (Bloomberg) — YRC Worldwide Inc. bonds fell after the trucking company trying to avoid bankruptcy said it needed to extend the deadline for a debt exchange in order to convince enough bondholders to tender the securities.YRC, the biggest U.S. trucker by sales, is extending the exchange offer deadline to Dec. 23, after investors holding 75 percent of its debt initially agreed to the exchange, below the 95 percent required by bank lenders. As of 5 p.m. in New York yesterday, participation fell to 57 percent, the Overland Park, Kansas-based company said in a statement. The company said it believes some bondholders have withdrawn because they want to tender their notes only on the expiration date.“This moves the company backwards in its efforts to restructure out of court and again increases the probability of a bankruptcy filing in the near-term,” David Ross, a Baltimore- based analyst at Stifel Nicolaus & Co., wrote in a note today. Ross has a “sell” rating on the stock.YRC’s $150 million of 8.5 percent notes due in April fell 2.5 cents on the dollar to 58.5 cents as of 12 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.The company’s shares fell 7 cents, or 6.8 percent, to 94 cents, after earlier rising as much as 15 percent, on the Nasdaq Stock Market.The extension was announced a day after International Brotherhood of Teamsters President James Hoffa said Goldman Sachs Group Inc. was creating derivatives trades that would profit from YRC’s bankruptcy.‘Actively Soliciting’The most profitable Wall Street firm in history “is actively soliciting bond trades for clients and underwriting credit-default swaps to benefit from a failed exchange and resulting bankruptcy,” Hoffa, the union leader, wrote in a letter dated yesterday to Goldman Sachs Chief Executive Officer Lloyd Blankfein.YRC, which has posted more than $1.7 billion in losses in the past five quarters, must complete the exchange offer as part of agreements with its bank lenders, the Teamsters and multi- employer pension funds, according to a Nov. 24 regulatory filing.The company has faced opposition to its plan to exchange $536.8 million of notes for equity from bondholders who also own derivatives that pay out in a default, according to people familiar with the matter. The Teamsters’ pressure comes as Goldman Sachs is being criticized from other labor groups for its role in the subprime mortgage crisis.Revised TermsThe company changed the terms of the exchange so that it now requires 70 percent of holders of its 8.5 percent notes and a combined 85 percent of its 3.375 percent convertible notes and 5 percent convertibles, both due in 2023, to tender. Lenders holding two-thirds of commitments under the company’s credit agreement need to approve the revised offer, YRC said in its statement today. The company said it reached a tentative agreement with a steering committee of lenders to approve the revised offer.YRC joins companies including Yellow Pages publisher Idearc Inc. that met opposition to restructuring outside of bankruptcy court from creditors that hedged their holdings with credit- default swaps. Such creditors will typically get paid whether a borrower defaults or not, and sometimes can make more in a bankruptcy.The Teamsters aren’t the only union taking on Goldman Sachs. Workers United, which represents 150,000 people in the U.S. and Canada, sent letters on Dec. 14 to 10 state attorneys general that urged them to investigate the role played by Goldman Sachs in the subprime mortgage market. The union noted that Massachusetts won a $60 million settlement from the firm in May when it undertook such a probe.Mortgage RoleAndy Stern, president of the 2.1 million-member Service Employees International Union, has led a letter-writing campaign to Goldman Sachs board members demanding information on the firm’s part in the mortgage crisis and whether the companies they’ve invested in are cutting jobs.Hoffa wrote that “the relatively small benefit Goldman would derive for itself in fees or for clients from such a position is unconscionable given the fact that the 50,000 livelihoods could be ruined by a bankruptcy filing,” according to the letter obtained by Bloomberg News.Michael DuVally, a spokesman for New York-based Goldman Sachs, confirmed the bank received the letter and said in an interview today that it was “actively exploring ways to help” YRC. He declined to elaborate on any aspect of how the bank may do so.“Goldman does not have a position in the company, nor are we making markets in the company’s bonds or credit-default swaps,” DuVally said in a telephone interview yesterday afternoon.E-mail OffersGoldman Sachs sent e-mails to debt investors at around 11 a.m. yesterday in New York, offering pricing levels on YRC bonds and credit-default swaps and saying that $25 million of the bonds and swaps were “trading here,” according to people familiar with the matter.DuVally declined to comment further on YRC or the e-mails.Iain Gold, a director in the Teamsters’ strategic research department, also confirmed the contents of the letter.“If it was going on, maybe they stopped,” Gold said in an interview today. “They told us they weren’t doing it, so we have to take them on face value. But we’re going to continue to monitor and if we get intelligence that they’re doing something differently, we’re going to raise it.”Hoffa, 68, has led the Teamsters since 1998. The Teamsters union represents 1.4 million members, according to its Web site.‘Strongly Take Issue’Credit-default swaps are financial instruments based on bonds and loans that are used to hedge against losses or to speculate on a company’s ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.In response to labor statements over Goldman Sachs’s role with mortgages issued to borrowers with the weakest credit, DuVally said in an e-mail that “we strongly take issue with the assertions the union makes. For example, Goldman Sachs was never one of the larger issuers of subprime securities.”During 2006, when the housing bubble started to burst, Goldman Sachs was the 13th-largest issuer and sixth-largest underwriter of securities backed by subprime or second mortgages, according to newsletter Inside MBS & ABS.It was the seventh-largest issuer and sixth-largest underwriter of bonds backed by Alt-A loans, which are a step higher in credit quality. Issuers acquired and packaged the loans into securities, while underwriters sold the bonds that were created, including those created by others, to debt investors.To contact the reporters on this story: Pierre Paulden in New York at ppaulden@bloomberg.net, Shannon D. Harrington in New York at sharrington6@bloomberg.netLast Updated: December 17, 2009 16:50 EST
