YRCW sells controlling stake in YRC Logistics
YRC Worldwide announced Friday it is selling a stake in its YRC Logistics business to Austin Ventures, a private equity group, for $37 million as it looks for ways to maintain liquidity in the face of a heavy debt load and slow customer demand for partial-load carriers.
The statement suggests Austin Ventures will control the private company and YRCW will retain a share in the joint venture. The company will specialize in freight forwarding, customs brokerage, transportation management, truckload services, and dedicated warehouse and fulfillment services around the world.
“This transaction enables YRC Worldwide to focus on our core transportation capabilities while continuing to offer full global logistics solutions for our customers through a strong business relationship with the new company,” said Bill Zollars, chairman and chief executive officer of YRCW. “There will be no change in the way a customer’s business is handled, and they will benefit from advancements in the delivery of comprehensive supply chain solutions by both companies.”
The troubled parent company of YRC and other less-than-truckload carriers based in Overland Park, Kan. said it would retain all of its China-based trucking and logistics operations, which will provide ongoing service to the new strategic partnership with Austin Ventures.
Austin Ventures said it would retain the YRC Logistics management team. Austin Ventures has $3.9 billion under management, including Port Logistics Group, which was formed in October 2008 through the acquisition of three port drayage and warehousing companies. Port Logistics Group is headed by Robert Stuhl, former head of Roadway Express, which was acquired by YRC Transportation in the middle of last decade and has proven difficult for YRC to integrate.
YRC has survived during the past year by restructuring its debt several times and giving debt holders equity in the company at reduced value.
Earlier this month it said it expected to achieve positive adjusted earnings before interest, taxes, depreciation and amortization as an enterprise and positive operating income for its Regional Transportation segment for the second quarter. It also said the operating income would go to cover interest payments, advisor fees, working capital and other expenditures.
YRCW also amended its revolving credit line to reduce the impact of negative effects of the Roadway integration on its ability to borrow under the facility. It said it now has the ability to borrow an additional $22 million, if necessary.
It said it is looking at a number of ways to improve short-term liquidity, including pursuing the sale of non-strategic assets or business lines.
The new deal is to be finalized within 45 to 60 days. ' Eric Kulisch