OVERLAND PARK, Kan. (
shares were set to trade higher Thursday on increased volume after the trucking company completed a debt-for-equity offer that will help it avert a bankruptcy filing.
said Thursday that noteholders tendered $470 million in debt, representing approximately 88% of the company's outstanding notes, which will be exchanged for 37 million common shares and 4.3 million convertible stock. The offer was set to expire Wednesday night.
"The success of this note exchange marks a major turning point for YRC Worldwide -- with our significantly restructured balance sheet and enhanced liquidity, we will move forward from a more solid financial foundation," Bill Zollars, YRC's chairman and CEO, said in a statement.
Last month, YRC Worldwide launched the exchange offer and said that, with full participation, it would see noteholders exchange approximately $536.8 million in notes plus accrued and unpaid interest for shares of common stock and new convertible preferred stock. Together on an as-if converted basis, it would represent 95% of YRC Worldwide's common stock.
The debt exchange will help YRC Worldwide gain cash and remain afloat, although it will cause massive dilution for current shareholders. In recent months, the company has struggled while trying to stave off bankruptcy, resorting to massive job cuts and selling real estate. Since the debt-exchange offer was first announced on Nov. 2, shares have tumbled more than 70%.
After falling short again of the 95% participation rate needed several times, YRC Worldwide amended the minimum tender condition for the exchange offers, requiring 70% of the aggregate principal amount outstanding of the 8.5% notes and 85% of the aggregate principal amount outstanding of the 3.375% notes and the 5% notes on a combined basis in order to be successfully completed.
extended the deadline for a sixth time as not enough
noteholders tendered their notes the first five times.
Shares of YRC Worldwide initially jumped 25% Thursday to $1.25 in the premarket session, although optimism faded as investors noted that the converted debt will represent approximately 94% of the company's stock. That will render current YRC Worldwide shareholders' investments virtually worthless. Still, the stock was lately up 4 cents to $1.03.
More than 6.3 million shares changed hands in Thursday's premarket session alone, compared to the stock's 50-day average daily volume of 9.35 million, according to the
YRC Worldwide has a 58.8 million-share float with a massive short interest float of 51.4% as of Dec. 15, according to Yahoo! Finance. Insiders hold only 1.5% of the company's shares, with another 57.8% owned by institutions.
-- Written by Robert Holmes in Boston
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