Ed Wolfe of Wolfe Trahan & Co. said in a note that new CEO James Welch is well regarded and noted that YRC reported positive adjusted earnings before interest and taxes for the first time in almost three years. But he also said that current trends and YRC’s rising cash needs probably will mean the restructuring was “too little too late.” Wolfe estimated that the move gave YRC three or four more quarters.
In addition, shareholder equity will be worth almost nothing after a 97.5 percent dilution that causes the number of YRC shares to surge from 48 million to 1.9 billion. And that’s before more dilution from convertible debt, which could push the share count toward 6 billion, Wolfe said, adding that he expects YRC’s stock to be “delisted within weeks.”
“Given current operating trends and cash flow projections we still expect YRCW to be forced into bankruptcy within 3-4 (quarters),” he said.