Final Last Chance for YRC?

YRC is making what should be one last extension of its debt-for-equity swap offer through midnight tonight. The key block of convertible bonds that needs 95% approval is at 81%, only 1% up from yesterday’s report.

The Teamsters are on a PR offensive, targeting banks and hedge funds that they believe are holdouts on the swap offer. All three of the banks listed in the Wall Street Journal piece are based outside the US. Barclays is British, UBS is Swiss and Toronto Dominion is of course Canadian; thus, they are largely immune from any pressure that the US government could bring to bear. Such protests may be too little too late and may be designed to cast the Teamsters as the victim of greedy hedge funds and foreign banks, possibly setting the script for Michael Moore’s next movie.

New Years Eve brings a $19 million interest payment that YRC seems unable to make. Tomorrow may be a major day for freight carriers nationwide, as it would be likely that YRC would file for bankruptcy if they can’t make their interest payment.

A silver lining to this is that this comes over a long holiday weekend where there will be a minimum of freight on the move. That will allow YRC to wind down operations in an organized manner.

One thing that has yet to be mentioned in the coverage of YRC is whether the federal government might step in to cushion the fall. It doesn’t seem likely, but some sort of Washington action to avoid an Arrow-like debacle on a huge scale might be under consideration.

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