Treasury takes 30% stake in trucking company in exchange for $700M loan
The company is a “critical vendor” to the Department of Defense, government says
The U.S. Treasury Department announced this week that it would acquire a nearly 30 percent stake in a major U.S. trucking company, in exchange for a $700 million loan.
The government and YRC Worldwide agreed to terms on June 30 that would give the Treasury Department shares of common stock constituting 29.6 percent fully diluted ownership (after issuance).
The loan will be delivered to the company in two tranches, and will be issued in connection with the CARES Act. Part of the multitrillion-dollar law allows the government to deliver funding to companies that are deemed necessary for national security.
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YRC is a leading provider of military transportation and other hauling services to the government, providing 68 percent of less-than-truckload services to the Department of Defense.
U.S. Treasury Secretary Steven Mnuchin said in a statement the loan will allow a “critical vendor to the Department of Defense to maintain significant employment while providing appropriate compensation to taxpayers.”
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YRC, which employs 30,000 trucking professionals, said the money will be used to pay for deferred employee health care, pension costs, other contractual obligation and essential capital investment.
“Our 30,000 employees have continued to serve hundreds of quarantined communities across the country during the pandemic and this financial assistance will enable us to bridge this pandemic-related crisis and continue to provide essential shipping services for the nation’s supply chain,” YRC CEO Darren Hawkins said in a statement.
The U.S. government sued YRC in 2018, claiming the company overcharged the Pentagon from 2005 to 2013, as reported by The Wall Street Journal.