OVERLAND PARK, Kansas (Reuters) - Troubled U.S. trucker YRC Worldwide (YRCW.O) said it was again extending a crucial debt-for-equity offer that it needs to stay afloat as it worked to convince bondholders to participate.
Also on Tuesday, union workers said they would stage a protest against hedge funds and banks they believe are blocking a successful exchange by holding positions that could generate profits from a YRC failure.
"Now it is time for the remaining bondholders to recognize what is at stake and do their part," said International Brotherhood of Teamsters general president Jim Hoffa. "The company's customers need to know there is a light at the end of this tunnel."
YRC said 81 percent of the company's outstanding notes, which total $536.8 million, had been tendered in the proposed exchange for equity, up from about 80 percent a week ago, but still well below a needed threshold.
The offer had been set to expire late Monday night, but YRC officials extended the offer until 11:59 p.m. EST on December 29 (0459 GMT December 30), the fifth such deadline set for the exchange offer over the last few weeks.
The extension helped send YRC shares to end up 8.4 percent at $1.03 as investors and analysts continued to speculate over whether or not the company would be forced into bankruptcy.
Shares of YRC rivals Old Dominion Freight Line (ODFL.O), Arkansas Best ABFS.O and Con-way CNW.N also rose Tuesday amid YRC's struggles.
Still, YRC was running out of options, analysts said.
"I don't know what is left for them to do right now," said Dahlman Rose industry analyst Jason Seidl of YRC. "It continues to be a game of financial chicken."
YRC, which is the largest U.S. trucking company handling smaller, or less-than-truckload shipments, is struggling to stay out of bankruptcy and has hinged its hopes on a financial restructuring based on the debt-for-equity swap.
As part of the restructuring, YRC plans to issue up to 42 million shares of common stock and 5 million shares of Class A convertible preferred stock, giving noteholders 95 percent of the company's common stock.
The company has said the debt exchange is key to maintaining leniency from lenders, and warned its liquidity position could become unsustainable by the end of this week if it has to make a $19 million payment due on January 1, 2010.
In its announcement Tuesday, YRC said so far 92 percent of the aggregate principal amount of its 5.0 percent and 3.375 percent notes and 53 percent of its 8-1/2 percent notes had been tendered into the exchange offers, representing 81 percent of the company's outstanding notes.
But the company needs 70 percent of the aggregate principal amount outstanding of the company's 8-1/2 percent notes, along with at least 85 percent of the aggregate principal amount outstanding of the 3.375 percent notes and the 5 percent notes on a combined basis for the exchange to be successful.
With only 53 percent of the holders of the 8-1/2 percent bonds tendering, the company remains about $26 million below its required threshold and would need to raise funds to retire those notes, which come due April 2010, a prospect many analysts have deemed difficult.
Wall Street Strategies analyst David Silver said he thought the company could still avoid bankruptcy, however.
"It's bad in the fact that they aren't getting the needed people to step up and convert their shares," said Silver. "But they keep on inching higher. Eventually I think they'll get there."
Silver said he expected YRC to sweeten the deal for the holders of the 8-1/2 percent notes with some additional incentives.
"You're going to see YRC really step up and say this needs to get done," he said.
The Teamsters said the union would protest at the headquarters of Brigade Capital Management in New York to urge the hedge fund not to hinder the deal.
But a Brigade official, who did not wish to be named, said Brigade officials had repeatedly informed YRC and the Teamsters that they do not own the YRC bonds and are not involved in any way in thwarting the exchange.
Seidl, the Dahlman Rose analyst, said hedging opportunities surrounding YRC's troubles are to be expected.
"This is also what the results are telling us. These people haven't budged," said Seidl of the 8-1/2 percent noteholders. "If they feel they can make more money... (if YRC goes bankrupt) then they aren't going to convert."
Reporting by Carey Gillam, editing by Dave Zimmerman and Tim Dobbyn