The announcements seem to have generated plenty of skepticism:
J Douglas Woodrich with Longbow Research reiterated a ?Neutral? rating on YRC shares and kept his EPS estimates as is, writing that the deal and the split are positive, clearing the way for a replacement for YRC CEO Bill Zollars. The initiatives certainly improve the company?s long-term survival prospects.However, the stock is still one to avoid, in his view, ?given the sizeable debt and lackluster tonnage.? Woodrich wants to see YRC win back customers and improve its package yield, he writes.
Jason Seidl with Dahlman Rose & Co. keeps his ?Hold? rating, expressing concern about the substantial dilution threatened by the deal with the Teamsters. The agreement forces YRC to raise $300 million by March and also to convert its debt to equity, and give a portion to the Teamsters. He also doubts whether the measures will be approved by the union?s vote. Arkansas Best (ABFS) employees earlier this year voted down concessions meant to aid that firm. And other trucking outfits are in the process of giving back wages and benefits while YRC seems to be asking for further sacrifice.
There was one rating change today, by Stifel Nicolaus?s David Ross, who cut the stock from ?Hold? to ?Strong Sell.? The reverse split will ?significantly reduce liquidity and force investors to trade based on fundamentals (volume and margin outlook), which we believe are poor.?
MFG
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