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YRC Worldwide (YRCW) Discloses Portions of Investor Presentation Ahead of IBT Vote

January 10, 2014 7:15 AM EST
As previously announced, on December 23, 2013, YRC Worldwide Inc. (Nasdaq: YRCW) announced that it had executed stock purchase agreements with certain investors (the “Investors”) pursuant to which it has agreed to sell (the “Sales”), in the aggregate, a combination of shares of Common Stock, par value $0.01 per share (the “Common Stock”), and shares of the Company’s new Class A Convertible Preferred Stock, par value $1.00 per share (the “Preferred Stock”), for an aggregate purchase price of $250.0 million in cash. The Company intends to use the proceeds therefrom to repay indebtedness. In addition, certain existing holders of the Company’s 10% Series B Convertible Senior Secured Notes due 2015 (the “Series B Notes”) have agreed to exchange or convert their Series B Notes in an aggregate principal amount of $50.6 million for an aggregate of approximately 3.3 million shares of Common Stock (the “Series B Note Exchanges” and, together with the Sales, the “Transactions”). In anticipation of the Transactions, YRC Worldwide Inc. (the “Company”) entered into a series of confidentiality agreements (the “Confidentiality Agreements”) with the Investors and other unrelated third parties (collectively, the “Restricted Parties”) in connection with the Transactions. Under the Confidentiality Agreements, on and after December 10, 2013, the Company engaged the Restricted Parties in discussions regarding the Company’s capital structure, and provided them with certain confidential information concerning the Company. The Company agreed under the Confidentiality Agreements to disclose publicly certain information disclosed to the Restricted Parties under the Confidentiality Agreements after a specified period of time if certain conditions were met. Specifically, under the Confidentiality Agreements, the Company is obligated to make public a document (this “Cleansing Document”) containing information related to the Transactions that constitutes material non-public information. This Current Report on Form 8-K constitutes a Cleansing Document that satisfies the Company’s disclosure obligations under the Confidentiality Agreements. Between December 10 and 20, 2013, the Company’s management met with the Restricted Parties to discuss the Transactions, and the Restricted Parties were provided with presentation materials that included the attached slides (the “Presentation”). In addition to the Presentation, the Company also provided the Restricted Parties with a summary of the cost savings projected to result from the Extension of the Agreement for the Restructuring of the YRC Worldwide Inc. Operating Companies, by and among YRC Inc., USF Holland, Inc., New Penn Motor Express, Inc., USF Reddaway and the Teamsters National Freight Industry Negotiating Committee of the International Brotherhood of Teamsters (the “IBT Agreement”). The Company projects that average annual cost savings, if the IBT Agreement were to be ratified and fully implemented, would total approximately $100.0 million, and would consist of the following categories: (i) monetary savings of approximately $60.0 million, the principal components of which include savings from foregone 2014/2015 wage rate increases, a reduction in the rate at which vacation time accrues, changes in health and welfare benefit rates and a reduction in vacation time for certain employees; (ii) reduced absenteeism related savings of approximately $25.0 million, the principal components of which include savings from the introduction of progressive disciplinary procedures for absenteeism and allowing employees the option during busy months to work while also receiving one week of vacation pay; and (iii) savings from cost efficiencies resulting from greater operational flexibility of approximately $15.0 million. The following was from the investor presentation:


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