YRC Worldwide averts bankruptcy

This is just too weird.

From Bloomberg

Jan. 1 (Bloomberg) -- Goldman Sachs Group Inc. helped YRC Worldwide Inc. complete a debt swap to avert bankruptcy after the Teamsters union said the bank was trying to profit from a failure of the largest U.S. trucker by sales.

A group consisting of Goldman Sachs, Deutsche Bank AG, Aristeia Capital LLC, Silverback Asset Management and a Smith Management LLC unit, “got us over the goal line by going into the market, buying bonds and tendering them,” YRC Chief Executive Officer Bill Zollars said yesterday.

For those of you who have not followed this saga, here it is in a nutshell.

YRC Worldwide is in financial difficulty. They offered a deal to the bondholders to swap bonds for stock. But, sometime during or before this offer went out (who knows the truth) Goldman Sachs started selling credit default swaps to bondholders, so if YRC Worldwide did go bankrupt, the bondholder would be covered.

So when YRC Worldwide made the swap offer to the bondholders, they couldn't get enough of the bondholders to agree for the deal to go through.

When James Hoffa (son of Jimmy Hoffa), who is president of the Teamsters Union (which represents the truck drivers of YRC Worldwide), got wind of what Goldman Sachs had done, he said some rather unkind things. I believe he also tried to get Congress to do something (good luck there).

Anyway, long story short, apparently there was sufficient pressure to persuade Goldman Sachs to have a change of heart. They bought up bonds to be tendered so the swap could go through,and YRC Worldwide averted bankruptcy.

Now, Goldman Sachs looks as if they were the good guy, but just remember, someone would have had to pay on the credit default swaps if YRC Worldwide had gone bankrupt, so they actually probably made out better in the end. Plus, no telling how much they made on commissions with all the transactions.

And, now they are friends with James Hoffa.

Humm.

Interesting story.

Maybe it will become a movie.