(Adds comment from company)
July 8 (Reuters) - Morgan Keegan said a bankruptcy at the struggling U.S. trucking company YRC Worldwide Inc (YRCW.O) was “still likely in the near to mid-term” and moved the stock to “not rated” from “market perform.”
Shares of the company sank as much as 23 percent to their lowest in two decades.
The brokerage also attributed the revision in rating to the uncertainty surrounding theoutcome of the company’s negotiations with the Teamsters union.
The company said in an email it does not comment on analyst reports.
Last month, YRC said it was opening talks with the Teamsters union on a modified labor agreement in an effort to save cost and preserve working capital.
The union has offered a deferral plan for pension payments in the short term, while YRC has proposed to the Teamsters a termination of pension payments for about 14 months, with the value of those payments totaling about $500 million, analyst Art Hatfield said in a note.
YRC’s proposal, if agreed to by the union, will provide the company with much-needed liquidity, the analyst said.
“That being said, we believe that, under this proposal, there are seemingly not equal concessions from YRC, making the potential for a successful outcome less likely,” Hatfield wrote in a research note.
So far this year, YRC has secured seven amendments from creditors to its $950 million credit facility and persuaded the Central States multi-employer pension fund to take property instead of cash for pension payments.
In January, the company had reached an agreement with its Teamster union-represented workers to take a 10 percent pay cut in return for a 15 percent stake in the company.
YRC shares sank to a low of 96 cents before trimming losses to trade down 18 percent at $1.02 in afternoon trade on Nasdaq. (Reporting by Eric Yep in Bangalore; Editing by Himani Sarkar, Pradeep Kurup)