Apollo acted collectively as the lead lender for a $600 million facility which provides additional liquidity and has a less restrictive financial covenant. This is expected to create operational runway as the company moves forward with its multi-year strategic initiatives designed to achieve sustained profitability.
“The new term loan agreement provides the company with increased liquidity through the elimination of annual principal amortization and the ability to reinvest cash proceeds from certain property sales back into the business. to successfully execute the company’s multi-year strategy, it is essential we have a capital structure in place that provides added liquidity to invest in the initiatives we have planned and better positions the company to navigate through cyclical economic environments,” said Stephanie Fisher, YRC Worldwide CFO.
Key provisions of the new term loan agreement include:
- Full elimination of the annual principal amortization of 3% ($18 million in cash savings per year)
- Reduction in the interest rate to LIBOR + 750 basis points from LIBOR + 850 basis points
- Replacement of the total leverage covenant with a new covenant to maintain a minimum of $200 million in last-12-month adjusted EBITDA (defined as consolidated EBITDA in the term loan agreement)
- Ability to reinvest cash proceeds on certain future property sales (first $40 million over loan term)
- Maturity of June 2024 from July 2022
Overland Park, KS-based YRC Worldwide is an American holding company of freight shipping brands YRC Freight, New Penn, Holland and Reddaway.