December 9, 2009 / 1:55 PM / 10 years ago

UPDATE 3-YRC tender offer falls short, to be extended

* 72 pct of noteholders have tendered so far

* To extend offer through Dec. 15

*Shares rise 9 cents to $1.08 (Updates with share closing price, analyst comment)

By Carey Gillam

CHICAGO, Dec 9 (Reuters) - YRC Worldwide Inc (YRCW.O) said only 72 percent of its noteholders have tendered their notes in the company’s critical debt-for-equity exchange offer — below the number needed — and it plans to extend the tender deadline.

YRC said that although it was encouraged by the tender results, 95 percent of bondholders must approve the swap, so it plans to extend the offer through Dec. 15.

The Securities and Exchange Commission has continued to review the company’s registration statement relating to the exchange offers and has not yet declared the statement effective, which is a condition of the offer, YRC said.

YRC is the nation’s top less-than-truckload carrier. It has been struggling to stay out of bankruptcy, laying off thousands of workers and cutting deals with labor and lenders to stay afloat.

The debt-for-equity swap is considered critical for the company’s financial restructuring as it would eliminate more than $500 million of debt from YRC’s books and provide it with fresh liquidity to continue its restructuring efforts.

Analysts reacted to the news with cautious optimism, saying the extra time might help the trucker garner enough support from bondholders to win fresh leniency from lenders.

“Time is of the essence for YRCW as we believe it continues to burn cash,” said industry analyst Ed Wolfe in a report to investors.

Still, the analysts said, the company continued to face significant challenges and a bankruptcy filing remained a real possibility.

“If the vote is not close to 95 percent, we believe a pre-packaged Chapter 11 will be attempted,” Dahlman Rose transportation analyst Jason Seidl wrote in a note to investors. “We believe this would be very hard to pull off ... and will likely cause the company to lose a significant number of customers.”

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.

In a further setback, a contingent of YRC union workers in Chicago voted to reject the company’s sought-after 5 percent wage concessions and pension termination. Approval is necessary to enforce certain credit provisions, though the company could choose to shut down some Chicago operations.

Shares of the company staged a partial recovery Wednesday. After closing down more than 13 percent on Tuesday, shares ended up 9.1 percent, or 9 cents, at $1.08 on Wednesday. (Editing by Steve Orlofsky)

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