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U.S. Treasury to Loan $700 Million to Trucking Firm YRC


kscarbel2
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The Wall Street Journal  /  July 1, 2020

WASHINGTON—The U.S. government plans to lend $700 million in coronavirus stimulus funds to trucking firm YRC Worldwide Inc., in exchange for a 29.6% equity stake in the company, the Treasury Department said Wednesday.

The Treasury said publicly traded YRC qualified for the loan under a provision of the $2.2 trillion law Congress enacted in late March that authorized $17 billion for companies deemed essential to national security.

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I hate to see "too big to fail" companies rewarded again, but YRC is so big that it's closing would threaten our transportation network and lay off so many workers that it would threaten the solvency of several states unemployment funds. Probably cheaper to invest in YRC now than to pay more to cover the pension shortfalls later, too. 

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If so poorly run then they should file bankruptcy just like GM they are just bailing out the union, just one more BS story of how another company is destroyed by union pensions. what about all the non union scab truckers as we are called, not helping them is racist, they are not getting helped because they are the wrong  color what ever that is, just more bailout BS promoting poor management.   

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The very LAST thing that the LTL portion of the trucking industry wants to see is YRC fail.  I work for Old Dominion and my SCM (Terminal Manager) and I have talked about this several times over the past 5 or 6 years. If YRC closed their doors on Monday it would be so much more devastating that the 2002 closure of CF because there are far fewer carriers to pick up what is going to be left out there. All of the LTL carriers would struggle to the point that some might actually fail as well. In short the closure of YRC would create a situation of back logged shipments that would take weeks and possibly months to overcome. Friday afternoon My ex-brother-in-law stopped across the road from me at my neighbors home and I walked over and the three of us chatted about this situation. Doug is a city driver for ABF, Dan a city driver for UPS Freight and I'm a sup for ODFL. None of us like the fact that YRC has been bailed out by the gov't twice but we like the idea of them going out even less. The LTL industry would be overwhelmed for too long and would create so many more issues that our country just does not need right now.

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5 hours ago, Terry T said:

The very LAST thing that the LTL portion of the trucking industry wants to see is YRC fail.  I work for Old Dominion and my SCM (Terminal Manager) and I have talked about this several times over the past 5 or 6 years. If YRC closed their doors on Monday it would be so much more devastating that the 2002 closure of CF because there are far fewer carriers to pick up what is going to be left out there. All of the LTL carriers would struggle to the point that some might actually fail as well. In short the closure of YRC would create a situation of back logged shipments that would take weeks and possibly months to overcome. Friday afternoon My ex-brother-in-law stopped across the road from me at my neighbors home and I walked over and the three of us chatted about this situation. Doug is a city driver for ABF, Dan a city driver for UPS Freight and I'm a sup for ODFL. None of us like the fact that YRC has been bailed out by the gov't twice but we like the idea of them going out even less. The LTL industry would be overwhelmed for too long and would create so many more issues that our country just does not need right now.

Why should US tax dollars bail out a loser like YRC, when good LTL carriers like Southeastern, ABF and Central freight could replace them?

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My uncle who built his one truck garbage hauling operation into a small fleet and built his own roll off and paper shredders had a term for it: "Socialism for the rich". That said, the GM and FCA bailout loans were paid back and hundreds of thousands of jobs were saved, and the Corvette lives on!

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22 hours ago, Maxidyne said:

My uncle who built his one truck garbage hauling operation into a small fleet and built his own roll off and paper shredders had a term for it: "Socialism for the rich". That said, the GM and FCA bailout loans were paid back and hundreds of thousands of jobs were saved, and the Corvette lives on!

I respect Ford for not taking a bailout. GM did pay back their loan, but that FCA did matters little to me since the U.S. government gave Chrysler to Fiat (the Agnelli family) for basically nothing.

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First off get off this GM paid back the money, they did not they filed and the Government sold the stock they got for pennies on the dollar the US taxpayer got screwed and the small investor got nothing, get your shit straight, and how can a abundance of work help to make another carrier fail if YRC goes under the strain of more work will somehow cause a carrier to lose money, that does not in compute no matter how you look at it your just trying to make a excuse to save your union brothers job and GM would never have gone away it would just be called Amazon/GM.

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880 Million in debt, YRC will never make it, you cut your loss and move on, the drivers will be absorbed by other carriers like always, you guys love to make it out like they lose their job and cannot get another, the reason the Government is lending them money is no bank will touch them they know their failure will soon arrive, YRC is dead no wants to admit it. 

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As they say, "The devil is in the details" The GM bankruptcy was about as successful as a bankruptcy can be because the government insisted that GM fix it's problems and end it's mismanagement while protecting jobs, health care for around a million citizens, and the communities that hosted GM. Because that bankruptcy was so well done there is now an independent GM Museum, many small town dealers who'd lost franchises were able to appeal and get them back, and they created the RACER Trust to clean up the pollution left behind by GM's abandoned factories. Looking at the alternative, I'd say the taxpayers got their money's worth.

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6 hours ago, kscarbel2 said:

Why should US tax dollars bail out a loser like YRC, when good LTL carriers like Southeastern, ABF and Central freight could replace them?

As I said above there simply isn't enough drivers & equipment to pick up what would be lost if YRC closed. None of their equipment would be available for purchase right away. Much of their equipment is old and undesirable. Freight would stack up on shippers docks to the point that production would have to halt for a period. Carriers' service standards would be crushed. You would be amazed at just how much freight moves into distribution centers via LTL. Wal Mart, Kroger, Family Dollar/Dollar Tree, Dunhams & Dollar General all have distribution centers that my service center delivers to. For Kroger we sometimes take 5 or 6 sets of pups to them per day and up to 10 sets, one Wal Mart DC gets 1 to 4 sets a day & this is just one carrier. If you think it was hard finding toilet paper in March think about how hard it would be to find everything if it cannot get from the manufacture to the DC's.

 

I said that I don't like the fact that the gov't is bailing them out again but if YRC tanks the fallout will be much worse.

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On 7/3/2020 at 8:09 AM, david wild said:

If so poorly run then they should file bankruptcy just like GM they are just bailing out the union, just one more BS story of how another company is destroyed by union pensions. what about all the non union scab truckers as we are called, not helping them is racist, they are not getting helped because they are the wrong  color what ever that is, just more bailout BS promoting poor management.   

 Management signed those contracts! Nobody held a gun to their head! I have had employees and I have been a union member I am 100% for the protection of a union! Yes there a re corrupt union officials get your head on straight we don't live in UTOPIA!  YRC is poorly managed and that is why they are in trouble NOT because they are a union shop. Instead of all of these MEGA companies being allowed to gobble up competition and then they become so big they "CAN'T FAIL" the federal government shouldn't allow all of these mergers and acquisitions so if a smaller company failed it wouldn't be necessary to bail them out.

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I agree- I worked a summer on a Yellow dock back in the 90s and the place was a disaster- They'd hire a bunch of us casuals but not enough fork lifts so we could accomplish much. Or they'd have you breaking down a trailer of GM parts going to 50+ different dealers, and after you had a system set up with 50+ different pallets and piles and were half way through the trailer, instead of letting you finish the job they put you on a different trailer at the other end of the dock and somebody else had to figure it out. Saw an expensive IBM computer sit in OS&D for weeks because management couldn't figure out where it came from and where it was going, and probably was afraid to ask IBM. If anything, the union kept YRC from totally falling apart.

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  • 1 month later...

Motley Fool  /  August 25, 2020

Shares of trucking company YRC Worldwide plunged a staggering 16.2% to $4.06 in 11 a.m. EDT trading this morning on negative news from an analyst at Stifel Nicolaus.

In today's report, Stifel resumed coverage of YRC with a "neutral" rating and a price target of $5.

As the analyst reports, YRC has succeeded in securing a "much-needed loan" of $700 million from the U.S. government, which will give the company "financial breathing room" that allows it to purchase new equipment and to refinance its debts "for years."

With this loan in hand, says Stifel, YRC can now "continue operations into 2021." But what happens after that?

YRC, after all, is a money-losing company that was losing money even before the COVID-19 pandemic tipped the economy into recession. Indeed, YRC lost money in two years out of the last five and avoided unprofitability by the skin of its teeth in one more year (2015). Its debt load -- $1.2 billion -- dwarfs the company's $220 million market cap. With the addition of $700 million in new loans from the government, it now probably owes closer to $2 billion.

In short, even if Stifel is right about YRC surviving "into 2021," the question of whether it can survive any longer than that remains highly uncertain.

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  • 9 months later...

Even though it's been about a year, even more, this topic is much more relevant now. When my firm wanted to donate sewn masks for healthcare workers I got fined for changing production. I just wanted to help, and the state just made me a debtor. I took out a loan https://www.edullinenlaina.com/25000e-laina/ and managed to set up a conveyor belt for sewing masks. I didn't give them away openly, I just gave them out to people and sent them to acquaintances in other countries. If our country forbids charity and gives money to the wrong causes, what happens to the money for cancer patients? 

Edited by Espadon
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