An analyst said Wednesday that YRC Worldwide Inc., one of the nation's largest trucking companies, could file for bankruptcy and close its doors as early as this weekend despite its effort to complete a critical debt-to-exchange offer.
YRC, based in Overland Park, Kan., extended its offer to bondholders for the sixth time. It now expires midnight Wednesday. The offer is considered a last resort for the company because it will free up much-needed cash. But it would also make current shareholders' stakes virtually worthless.
The company said it made progress in its push to get debt holders to swap their bonds for equity, though it still doesn't have enough. And time is running out.
YRC needs to make a $19 million interest and fee payment on Thursday. It said earlier this month that if it didn't have access to some extra cash by Dec. 31, its "liquidity position would become unsustainable."
If YRC does not complete the bond exchange, the company's last chance to avoid bankruptcy is a waiver from its lenders, according to Stifel Nicolaus analyst David Ross. If that doesn't happen, the company could file bankruptcy and close its doors as early as this weekend, Ross said.
Company spokeswoman Suzanne Dawson rejected that assumption.
"The company will be open for business as usual on Monday," Dawson said.
Iain Gold, Director of the Teamsters Strategic Research Department, said he believes the company will survive as well, noting the effort to convince bondholders that saving the company is in their best interest.
"We figured out how to get this far, so I think there's enough willpower and interest to get this over the goal line," Gold said. "We think it's in everybody's best interest to get this done outside of bankruptcy ... we believe the lenders will continue to work for it."
But Ross said even if a bankruptcy filing doesn't occur this week, it might not be far away.
"Whether or not the exchange goes through and the interest payment is made, we believe the company may still burn through all of its cash and borrowing capacity in the next two months, as customers are getting increasingly nervous about having their freight stranded in YRC's network," Ross said.
The last time a trucking company about the size of YRC went out of business was in 2002, after Consolidated Freightways filed for Chapter 11 protection. Less-than-truckload carriers like Consolidated and YRC, which consolidate shipments from many sources at company terminals, historically have not been able to keep their doors open after filing for bankruptcy because of their high fixed costs and customer defections.
YRC's shares fell 4.6 cents, or 4.5 percent, to 98.4 cents in afternoon trading.
© Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.