YRC Gains Pension Deferral

YRC Worldwide (YRCW) announced it had finalized an agreement with Central States, Southeast and Southwest Areas Pension Fund (known as Central States) in which the company will provide real estate as collateral in lieu of making pension contribution payments during the second quarter of 2009. The estimated deferral to Central States is approximately $83 million. Under the agreement, the company will repay the deferred contributions over three years beginning in January 2010.

In separate news, the International Brotherhood of Teamsters (IBT) said representatives of Teamster freight locals met in Chicago to discuss the operating and financial conditions at YRCW and, based on various financial analyses, agreed unanimously to give the Teamsters National Freight Industry Negotiating Committee (TNFNIC) authority to negotiate with stakeholders to address YRCW's need for additional operating cash.

Any proposed modifications to the labor contact between the IBT and YRCW would require a vote of approval by YRCW Teamster union members.

Subsequent to the agreement with Central States, YRCW said it is also finalizing discussions with other IBT multi-employer pension funds to join in the same agreement. The company said it has currently deferred about $50 million related to the other funds.

In its filing with the Securities Exchange Commission (SEC), YRCW stated the agreement permitted it to defer $83 million of contributions that were originally due by June 15, 2009 and it was working to reach an agreement that would allow it to defer $50 million to other funds. The agreement was structured so that the deferral is not viewed as a complete or partial withdrawal from the funds. A withdrawal from the pension funds carries a withdrawal liability. Interest will continue to accrue on the deferred pension payments. With Central States, the rate is set at Prime plus 2%.

YRCW has also amended its credit agreement with its lenders leaving intact the $950 million senior revolving credit facility and a senior term loan with an outstanding principal amount of $111.5 million.