The agreement will include provisions for YRC to maintain certain employment levels and limit executive pay. The department said taxpayers are receiving "proper" compensation for the loan with the 30% equity stake in YRC. The "financial protection of the government" section of the act requires the Treasury Department to take an equity stake or a senior debt status on the new debt if the borrowing company's shares are traded on a national securities exchange. Funding totaling $17 billion was set aside for businesses that are integral to maintaining the country's defense. The act appropriated $500 billion in lending for companies to bridge the COVID gap and keep employees on the payroll. The Treasury Department referenced a provision of the act as creating the authority for the loan. This loan will enable YRC to maintain approximately 30,000 trucking jobs and continue to support essential military supply chain operations and the transport of industrial, commercial, and retail goods to more than 200,000 corporate customers across North America," the statement continued. government and provides 68% of less-than-truckload services to the Department of Defense. "YRC is a leading provider of critical military transportation and other hauling services to the U.S. In a Wednesday statement on the lending agreement with YRC, the Treasury Department asserted that the carrier is "critical to maintaining national security." ‘Critical to maintaining national security' As part of the deal, YRC will be required to issue the Treasury Department shares of common stock, which YRC expects will equate to a 29.6% equity stake in the company. On Wednesday, YRC Worldwide announced its latest lending agreement, a $700 million, two-tranche program that will allow it to make delinquent health and welfare and pension payments as well as fund capital expenditures for its tractors and trailers. The loan's placement under the umbrella of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which is intended to help businesses survive the economic downturn caused by COVID-19 and maintain employment for their workers, is only drawing more scrutiny. (NASDAQ: YRCW), a perpetually struggling company and one that the government's own Defense Department alleges overcharged it for services. The claws are coming out already, with some industry onlookers questioning the government's rationale behind making a huge loan to less-than-truckload (LTL) carrier YRC Worldwide, Inc.
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