YRC worldwide Inc.,
a financially troubled truck driver transporting goods for the Department of Defense accounted for almost all of the funding for federal coronavirus aid funds for companies vital to national security.
Overland Park, Kan., Was one of eleven companies to receive loans through the $ 17 billion program for the sector, with the $ 700 million that went to the trucker being 95% of the roughly 736 million US dollars in outstanding loans.
The national security loan program was originally intended as an option to support large defense companies through a provision of the Cares Act’s $ 2.2 trillion aid package, but demand for the aid was less than expected and most of the aid eventually went to smaller businesses and startups.
YRC, one of the largest part-load operators where carriers handle loads for multiple shippers on the same truck, has drawn down $ 551.3 million, or about 79% of its loan, according to a report dated Jan. 4, according to the Tax Office. The government agreed to lend the funds to loan in July against a 29.6% stake in the company.
The injection of cash has helped prop up YRC’s debt-stricken finances and enabled the company to turn millions of dollars in dollars Health, pension and other obligations and renew its aging vehicle fleet.
YRC serves large industrial and retail customers such as
and moves an estimated 68% of Department of Defense shipments that are less than truckloads. The company has struggled under a high debt burden, and tried to turn business around when the coronavirus pandemic struck.
A non-partisan body of legislators has questioned completed the certification process for the YRC loan and urged the Treasury Department on how the trucker qualified for state aid despite his precarious financial condition prior to the pandemic. Several other Republican and Democratic lawmakers backed YRC’s loan application, Sending of support letters in April to Treasury Secretary Steven Mnuchin.
The Congressional Oversight Commission said in a December 31 report that many other companies also offer shipping of less than truckloads and that the Pentagon said it had not asked if other LTL providers could intervene if the YRC closes . The report also states that a $ 400 million tranche of the YRC loan earmarked for the purchase of new trucks and trailers exceeded the scope of funding under the Cares Act because it will not be used, to recover from losses due to the effects of Covid-19.
YRC’s loan agreement “complies with the Cares Act and any additional Treasury Department requirements,” said company spokeswoman Heather Nauert. “The capacity that YRC is currently adding to the supply chain is absolutely critical to our country’s efforts to restore the economy and the pandemic.”
Ms. Nauert said the work of the YRC Armed Forces is a highly specialized service with trained and certified drivers that enables the company’s trucks to access military facilities quickly and efficiently through a network of more than 300 terminals in the United States
“The transport of goods for the federal government is highly complex,” she said. “Not all transport companies can.”
Department of Defense spokeswoman Jessica Maxwell said YRC provides general cargo and hazardous materials and that the company’s “status as” critical to national security “is a function of the provision of these services to the DoD; it is not necessary that it is a unique provider of such services. “
The Department of Defense used the same criteria when screening companies for treasury loans that it used to provide funding under the Defense Production Act, Ms. Maxwell said. She said the Treasury Department made the “final decisions and decisions” to grant these loans.
The Treasury Department declined to comment on this article.
Mr Mnuchin said at a Congressional Oversight Commission hearing in December that taxpayers would benefit from the loan and that the Treasury Department’s national security decision was based on a recommendation from then Secretary of Defense Mark Esper. Although the YRC loan was risky, Mr. Mnuchin said, “It saved many, many, many jobs.”
Write to Jennifer Smith at [email protected]
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Appeared in the print edition of January 15, 2021 as “Trucker YRC Received Bulk of Relief Loans”.