On-Again, Off-Again Rally at YRC Worldwide Inc. Is On Again

Shares take off (before falling back) Monday on news the Teamsters are willing to play ball.

Jan 27, 2014 at 7:41PM

Another week, another chapter in the story of YRC Worldwide's (NASDAQ:YRCW) efforts to keep itself out of bankruptcy court.

Over the weekend, YRC management confirmed the news that shareholders have been waiting for: After voting 61% to 39% on Jan. 9 to reject a contract extending 15% wage cuts into 2019, union members have now voted 66% to 34% to approve essentially the same contract.

Teamsters President Jim Hoffa praised the result, saying it gives YRC its "best chance to stay in business and protect [union] jobs." But YRC still has work to do. As Teamsters National Freight Division Director Tyson Johnson pointed out, the company must proceed briskly to capitalize on the vote by undertaking "substantial debt reduction and refinancing initiatives."

That should now be possible. Five weeks ago, YRC sealed a deal with its lenders to convert more than $300 million in YRC debt into equity -- contingent on having the union's vote go through. With the vote in hand, YRC can proceed with its plan.

Indeed, YRC may go even farther than we've been led to expect. Commenting on the vote result, YRC CEO James Welch promised "a complete recapitalization" of the company. That might be a mere euphemism for rolling over the more than $1 billion in YRC debt not covered by the equity swap. Or it might mean something more ambitious.

What's next?
Indeed, we should probably hope it does mean something more ambitious. According to YRC, the debt-for-equity swaps already negotiated promise to cut YRC's annual interest payments by about $50 million. That might be enough to turn YRC's business free cash flow-positive -- but only just barely.

Ideally, YRC will try to use the breathing room (and higher stock price) it's gained from the union vote to trade an even larger portion of its equity for a reduction in debt. This would result in even more stock dilution to existing shareholders, true. But it would also pare back interest obligations even further, give YRC more financial room to maneuver, and allow YRC a chance to finally earn its first profit in seven years.

Because in the end, turning this business profitable is the only way to ensure its survival.

Lost money on YRC? Here's a chance to make it back
Have you lost money in the the 75% slide of YRC Worldwide stock these past few months? We can't promise to make it all back for you quickly, but we can help you recoup your losses slowly. How?

Dividend stocks can make you rich. It's as simple as that. While they don't garner the notability of high-flying growth stocks, they're also less likely to crash and burn -- like YRC. Over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Fool contributor Rich Smith and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information