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Anthony Alfidi
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Anthony J. Alfidi is the founder and CEO of Alfidi Capital, a private research firm in San Francisco, California. Alfidi Capital publishes free financial research with honesty and humor. Mr. Alfidi holds a Bachelor's degree in human resource management from the University of Notre Dame (cum... More
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  • YRC Worldwide Asks For Stay Of Execution 0 comments
    Dec 23, 2010 11:47 AM | about stocks: YRCW

    YRC Worldwide is looking for a way out of a death spiral debt trap.  Its creditors are giving it a little slack, but other stakeholders may not be so understanding:

    YRC Worldwide is asking the Teamsters union and pension fund managers for more time to restructure the trucking company’s troubled balance sheet.

    I have to hand it to YRCW's management.  They manage to stave off one short-term disaster after another.  The Teamsters are a different story.  The new creditors' agreement may embolden them to ask for accelerated reinstatement of the pension plan contributions they surrendered. 

    Recapitalizing a balance sheet involves writing down debt and/or injecting equity.  Forget about the debt writedowns; creditors extended the payment timeline with the expectation that their positions won't be written down at all.  That leaves YRCW with a need for more equity in Q1 of 2011.  Hmmm, they just went through a reverse split to raise their share price past the de-listing threshold, so issuing more shares means dilution.  They'll be right back in the NASDAQ de-listing queue with that move. 

    I still don't see a happy ending for this company, but comatose patients have been known to hang on for years before either reviving or expiring.  I am not aware of any coma patient who could revive while a cancer was eating away inside them.  YRCW's cancer is its unionized workforce.  It is time to cut them out to ensure survival. 

    Full disclosure: No position in YRCW.
    Stocks: YRCW
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