UPDATE 1-Baird cuts YRC on expectation of eventual bankruptcy

June 18 (Reuters) - YRC Worldwide Inc (YRCW.O) will eventually go bankrupt although the event may take several months or quarters to play out, said Robert W. Baird, downgrading the No. 1 U.S. trucking company to "underperform."

The brokerage also raised the less-than-truckload (LTL) sector to "outperform" and upgraded Con-way Inc (CNW.N) and Old Dominion Freight Line Inc (ODFL.O), citing an attractive upside from potential market share and pricing gains related to the YRC bankruptcy. Cash flow analysis suggests YRC would violate its $100 million liquidity covenant in the middle of the second half of 2009, with a negative cash balance in the first half of 2010 given required debt repayments, said the brokerage, which expects the bankruptcy within nine months.

The brokerage said recent trends reflect increasing financial distress for the company and added there were no apparent signs of a seasonal pickup, contrary to industry trends.

YRC officials could not be reached for comment early Thursday.

On Monday, Morgan Keegan said there was a "very high probability" that YRC may go bankrupt.

On June 17, YRC was reported to have obtained a new amendment to its credit facility that will help it make pension fund payments. [nN17323344]

"In the end we do not expect YRC to be able to manage through the current crisis," Baird said.

Shares of YRC closed at $2.17 Wednesday on Nasdaq. The shares have lost 85 percent of their value in the past year. For the alerts, please click [nWNAB0821].

(Reporting by Antonita Madonna Devotta in Bangalore; Editing by Aradhana Aravindan)

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