a Trucking company worth 70 million and who was sued by the government for misuse of government fund was granted 700 million in a corporate bailout due to COVID.
The US Treasury is giving a $700 million loan to YRC Worldwide, a troubled trucking company that warned in May it was in danger of going out of business.
That’s an enormous sum for a company whose stock had plunged 27% this year and was worth only $70 million as of Tuesday’s close. And here’s the kicker: The government sued YRC for ripping it off.
Long-term competitive problems had taken the company’s stock down 85% over the last five years. But shares of YRC (YRCW) shot up 60% in early trading on the news of the bailout.
US taxpayers will end up owning 30% of the company’s stock as part of the loan agreement.
The loan is not part of the federal CARES Act meant to help small businesses. Instead, it is meant to provide help to businesses critical to national security. Treasury’s statement said the loan was justified by the fact that the company provides a majority of the trucking services moving pallet-sized shipments of freight for the US military, a segment of the industry known as “less-than-truckload” or LTL