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YRC extends pay cut decision deadline

NEW YORK — The deadline for a vote to lock in an immediate 10 percent pay cut and other contract modifications for union workers at YRC Worldwide Inc., one of the nation’s largest trucking companies, has been extended by a week, the company said Monday.

Ballots were to be counted by Dec. 30, but the company said it pushed the deadline to Jan. 6 because of several factors; including holiday mail volume, harsh winter weather in some parts of the U.S., and a high number of ballot requests.

Earlier this month, the International Brotherhood of Teamsters and YRC agreed to a tentative plan for union workers to take an immediate 10 percent pay cut to boost the company’s slipping finances.

A trust has also been formed as part of the deal, which will give workers the opportunity to buy stock when the company starts to turn around. Union workers will be offered warrants equal to about 15 percent of the company’s outstanding stock, or about 10 million shares, through the trust. The trust can sell the stock after January 2010.

The 40,000 union workers employed by YRC are currently covered under a five-year contract that began in March. The Overland Park, Kan.-based company has a total of about 58,000 employees.

Stifel Nicolaus analyst David Ross said in a client note Monday that he believes the wage cuts will be approved, and will “provide some near-term relief.”

But he warned such concessions “are not good for employee morale and are not a long-term solution.”

He said he is “watching very closely” the ongoing integration of the company’s Yellow and Roadway units, calling the company’s financial health “very fragile.”

On Wednesday, YRC said it expects to have about 80 facilities consolidated or in the process of consolidation by the end of the year, with around 450 operations consolidated by spring 2009.

The company also signed a real estate deal with NATMI Truck Terminals LLC to sell and lease back a group of YRC facilities in the U.S. YRC expects to close the deal by the end of January. The total purchase price for the properties is $150.4 million. Initial lease payments will be $21.1 million per year.

YRC said freight demand slid further in the fourth quarter. In the company’s national transportation segment, tonnage -- the weight of goods hauled -- fell 11.8 percent from September to November. At its regional unit, tonnage sank 20.9 percent in the two-month period.

YRC said it will renegotiate some of its debt and canceled a planned tender offer to buy back up to $537 million in principal on senior notes issued.

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