The US Treasury is giving a $700 million loan to YRC Worldwide.
The loan is not part of the federal CARES Act meant to help small businesses. Instead, it is meant to provide help to businesses critical to national security. Treasury’s statement said the loan was justified by the fact that the company provides a majority of the trucking services moving pallet-sized shipments of freight for the U.S. military, a segment of the industry known as “less-than-truckload,” or LTL.
“Treasury’s determination was based on a certification by the Secretary of Defense that YRC is critical to maintaining national security,” said Treasury in its statement.
US taxpayers will end up owning 30 percent of the company’s stock as part of the loan agreement.
YRC warned in May that there was “substantial doubt” about its ability to stay in business without either federal help or a “meaningful stabilization of the economy in the near term.” On June 9, YRC warned that its per-day shipments were down 20 percent in the quarter, and the rates it was receiving per pound of freight moved were down 6 percent, compared to a year earlier.
The company has 30,000 employees, of whom 24,000 are represented by the Teamsters union. About half the loan money will be used to cover short-term contractual obligations, including pension and healthcare benefits. The loan will be due in 2024.
Source: CNN on MSN