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Bonds News

UPDATE 1-YRC extends bondholder deadline, shares surge

* Bondholder approval now at 75 percent

* Deadline for bondholders extended another day

* Says secures credit amendment with lenders

* Shares jump more than 20 percent

(Adds analyst comment)

By Carey Gillam

OVERLAND PARK, Kan., Dec 16 (Reuters) - U.S. trucking giant YRC Worldwide YRCW.O still has not been able to secure a critical debt-for-equity exchange with bondholders, but is extending the deadline for bondholder approval of the exchange as it works with lenders to keep the company liquid.

Investors responded to news of the extension by pushing shares up more than 20 percent on Wednesday, heartened in part by the extent of the company’s restructuring efforts and the apparent willingness of lenders to offer leniency.

“That lender group has a pretty vested interest in seeing them not go bankrupt,” said Morningstar analyst Anthony Dayrit.

YRC is the nation’s top less-than-truckload (LTL) carrier. It has been struggling to stay out of bankruptcy, laying off thousands of workers and cutting deals with labor and lenders as it tries to hold onto customers.

The company is trying to get 95 percent of its bondholders to agree to swap about $536.8 million in debt for equity. But the Overland Park, Kansas-based transportation company has obtained only 75 percent acceptance.

It said Wednesday it was extending the offer for the second time, hoping to get greater participation. The new deadline is 11:59 p.m., EST, on Dec. 17, 2009.

Some analysts expected YRC to announce a reduced threshold for acceptance. JP Morgan analyst Thomas Wadewitz said in a report to investors Wednesday that it was likely the 95 percent goal would be cut back, with 80-85 percent of bondholder acceptance more realistic.

“We believe there is a reasonable chance that YRCW will ultimately complete its notes exchange,” Wadewitz said in the report.

The company said Wednesday that it had entered into its 13th credit agreement amendment with lenders to continue to provide YRC with a $950 million senior revolving credit facility and a loan of about $111.5 million.

The company said the lender agreement extends the deadline for YRC to complete the exchange offers to Jan. 12, 2010 and extends the date when YRC must begin to comply with the minimum available cash covenant to the earlier of Jan. 12, 2010 or the date that the exchange offers are complete.

YRC officials would not comment, but said in a statement that they were “pleased with the progress” they were making on the exchange offer.

The moves come after the company last week said it was cutting more costs by slashing compensation for its nonunion employees.

YRC plans to issue up to 42 million shares of common stock and 5 million shares of Class A convertible preferred stock in the exchange, which would give noteholders 95 percent of the company’s common stock.

Dahlman Rose analyst Jason Seidl said he did not expect YRC to secure much more than the 75 percent in bondholder approval already achieved, and the company’s fate largely rests with lenders and how far they would be willing to go to keep the company afloat.

“We’re on the cat’s ninth life,” Seidl said. “If this doesn’t get done, I think they will go with a prepackaged bankruptcy.”

Shares were up 21.85 percent in late trading at $1.01. (Reporting by Carey Gillam. Editing by Robert MacMillan)

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