On Wednesday, federal authorities announced plans to provide a massive loan to trucking company YRC Worldwide Inc. in exchange for an equity stake in the company.
On July 1, U.S. Department of the Treasury announced intentions to provide Overland Park, Kansas-based trucking company YRC with a $700 million loan in exchange for a 29.6% equity stake in the company.
YRC entered into the agreement with the U.S. government on Tuesday, June 30, 2020. The company was worth only $70 million at the close of the market day on Tuesday, according to CNN.
The loan is being distributed as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES) after the U.S. Secretary of Defense determined that the trucking company is essential to national security.
From a July 1 news release from the Department of Treasury:
YRC is a leading provider of critical military transportation and other hauling services to the U.S. government and provides 68% of less-than-truckload services to the Department of Defense. This loan will enable YRC to maintain approximately 30,000 trucking jobs and continue to support essential military supply chain operations and the transport of industrial, commercial, and retail goods to more than 200,000 corporate customers across North America.
YRC CEO Darren Hawkins stated, “We would like to thank Congress for passing the CARES Act and the U.S. Department of the Treasury for providing this vital funding which recognizes the essential role YRCW plays in the nation’s supply chain. Through our work with over 200,000 customers, including being a leading transportation provider for the Departments of Defense, Energy, Homeland Security, and Customs and Border Protection, YRCW’s freight professionals have developed a deep understanding of, and expertise in, the importance of a secure and reliable supply chain.
“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. The funding will also enable us to continue successfully implementing our multi-year strategic plan to transform our five powerful brands to operate as ONE Company, ONE network to better serve our customers and the nation’s supply chain as economic recovery takes hold,” Hawkins said.
“We are pleased for Treasury to make this loan pursuant to the CARES Act,” said Secretary Steven T. Mnuchin. “This loan will enable a critical vendor to the Department of Defense to maintain significant employment while providing appropriate compensation to taxpayers.”
YRC is America’s fifth largest trucking company and the fourth largest provider of LTL services, according to 2019 revenue reports. It is one of the few unionized large trucking companies left in the U.S.