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Report: YRC to seek $1 billion in bailout funds

NEW YORK — YRC Worldwide Inc. plans to apply for $1 billion in federal relief money to shore up its pension fund obligations, The Wall Street Journal reported, citing CEO Bill Zollars.

YRC’s pension obligation is $2 billion dollars over the next four years, according to the Journal story. Zollars characterized the multi-employer union pension system as unfair, telling the paper that roughly half of YRC's contributions are meant to cover retirees who never worked for the company.

Aiming  "to get the conversation started" with the federal government, Zollars said YRC will submit an application for Troubled Asset Relief Program (TARP) money to the Treasury Department as early as Friday, the paper reported.

Citing experts familiar with the bailout program, the Journal noted that YRC’s chances of receiving the money appear to be slim.

The company also could request that the Pension Benefit Guaranty Corp. take over financial responsibility for pensions of retirees who worked for other companies that have since gone out of business, the paper said, citing a person familiar with the situation.

Along with the sale and leaseback of many of its terminals, as well as thousands of layoffs, YRC had previously negotiated a 10 percent wage cut with its Teamsters employees in exchange for an ownership stake in the company. YRC’s actions were needed for the struggling company to stay within the terms its credit agreements.

The steps have been taken as the Overland Park, Kan., company combined the operations of its Yellow and Roadway less-than-truckload units — and in a deteriorating freight environment.

In a Securities and Exchange Commission filing earlier this week YRC said that there is “substantial risk” that more cost cuts and shipment increases won’t come in time to meet its minimum requirement for credit facilities in the second quarter — which could lead to a possible default.

YRC said it is talking with its creditors to try and hammer out an agreement that would keep it in compliance with the terms of its debt.

Kevin Jones of The Trucker staff can be reached for comment at [email protected] .