SILVER SPRING, Md. (AP) — A struggling trucking company once sued by the Department of Defense is getting a $700 million loan from the U.S. government because it “is critical to maintaining national security," the Treasury Department said Wednesday.
U.S. taxpayers will take a 29.6% stake in YRC Worldwide as a result of the deal, which was made as part of the Coronavirus Aid, Relief, and Economic Security Act.
The announcement by Treasury did not mention that the Defense Department sued YRC in 2018 for overcharging the government for freight carrier services and making false statements.
“This loan will enable a critical vendor to the Department of Defense to maintain significant employment while providing appropriate compensation to taxpayers,” said Treasury Secretary Steve Mnuchin.
Treasury said the loan would enable YRC to maintain about 30,000 trucking jobs and continue to support the military supply chain and the transport of goods to more than 200,000 corporate customers in North America. The agreement requires YRC to maintain employment levels and limit executive compensation, dividends and share repurchases.
The loan will be broken up into two payments, with the first $350 million going to cover short-term contractual obligations and pension and healthcare payments, YRC said. The second payment will be used to invest in tractors and trailers. Both loans are scheduled to be repaid by September 30, 2024.
Shares in the Overland Park, Kansas company jumped nearly 70% to more than $3 after the announcement. YRC shares had lost nearly 90% of their value since early 2018, when they traded around $17.