OVERLAND PARK, Kansas (Reuters) - The sudden departure of YRC Worldwide Inc's YRCW.O President Tim Wicks sent the company's shares sharply lower on Tuesday, as analysts viewed the move as a blow to the still-struggling trucking giant and a sign of continuing instability.
The company’s shares fell nearly 11 percent after YRC announced Wicks was resigning after helping navigate the company through several complicated restructuring moves.
“It is somewhat of a blow to the company,” said Longbow Research trucking industry analyst Lee Klaskow. “He was instrumental in helping the company through its restructuring.”
YRC Chairman Bill Zollars said the departure of Wicks was not a reason for investor concern and in fact should be seen as an indication that the company was on a successful path.
“It is a sign of the fact that we’ve turned the corner and are building really a lot of positive momentum going forward,” Zollars told Reuters in an interview. “This will not affect our momentum at all.”
Wicks served as president for less than seven months and previously was chief financial officer. Zollars said Wicks had done a “really solid job.”
The departure of Wicks comes after the Overland Park, Kansas-based trucking company announced last month that its independent registered public accounting firm had said that YRC’s “significant declines in operations, cash flows and liquidity raise substantial doubt about (YRC’s) ability to continue as a going concern.”
The company told the Securities and Exchange Commission then that depending upon various factors “we would consider in court and out of court restructuring alternatives.”
YRC has been working to restructure for more than a year and narrowly averted bankruptcy in December by swapping $470 million in debt for equity. The move reopened credit and gave the company more time to turn the struggling business around.
“Wicks was a big part of why (the company) was able to make it through 2009,” said Dahlman Rose analyst Jason Seidl. “To see him leave before the company is definitely completely out of the woods is a little bit disconcerting from the investor point of view.”
Robert W. Baird & Co analyst Jon Langenfeld also said the departure of Wicks, which follows the loss of other YRC managers and key rank and file talent, complicates YRC’s survival.
"Though we believe a bankruptcy filing is less likely near term, YRCW's intermediate-term bankruptcy risk remains elevated," Langenfeld wrote in a note to investors. He said YRC faces stiff competition from rivals FedEx FDX.N, United Parcel Service UPS.N and others.
YRC said Wicks was returning to his former employer United Healthcare UNH.N where he worked from 2002 to 2008. YRC operations, sales and marketing are to report directly to Zollars.
Zollars did not address talk that the departure of Wicks came amid an internal management disagreement.
Zollars reiterated that YRC was seeing customers return and business volumes climb, and YRC should generate positive cash flow in the second quarter of 2010.
The company will release first-quarter earnings on May 4 and will name a new board of directors by the end of April or early May, Zollars said.
“We are starting to get a lot of traction in the marketplace,” Zollars said.
YRC shares were off nearly 11 percent at 57 cents in afternoon trading.
Reporting by Carey Gillam; Editing by Phil Berlowitz
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