Less-than-truckload carrier Yellow Corp. issued a statement Tuesday evening saying it would defer its required contributions for June and July as planned, potentially resulting in a strike by some of its Teamsters workforce.
Central States Funds, which manages health and welfare and pension funds for Teamsters at Yellow (NASDAQ: YELL) operating companies YRC Freight and Holland, issued a delinquency notice to plan participants Monday evening. The notice showed the carriers’ participation in the pension plan would be terminated Sunday and health care claims incurred after Saturday would not be paid.
The letter said the company withheld the June payment and was planning to withhold the July payment. Central States estimated payments for the two periods to be more than $50 million.
A separate letter from the Teamsters on Monday advised the impacted local unions to demand payment by Friday or risk a work stoppage on or after Monday. The protocol is part of the parties’ collective bargaining agreement, which requires the union to give the employer 72 hours’ notice of a strike authorization.
“The Company advised Central States Funds that it would defer payment of health and pension contributions for June (due July 15) and July (due August 15) to preserve liquidity as it worked to obtain meetings with the IBT [International Brotherhood of Teamsters] as well as secure additional financing,” a Tuesday evening statement from Yellow read.
Yellow said the two months of deferrals would equal “approximately $50 million dollars” and reiterated that it had only deferred one of the two payments thus far.
“The company intends to repay the funds with interest immediately upon securing additional financing and has asked the funds to discuss acceptable terms,” Yellow’s statement read.
A recent filing with the Securities and Exchange Commission showed Yellow had in excess of $100 million in cash and cash equivalents as of June 30.
Plan participants have the option to pay for health insurance out of pocket, Central States advised. The health coverage costs $471.86 per week through July 29, increasing to $507.08 per week through July 2024, the notice stated. Payments must be received by Aug. 23.
Roughly half of Yellow’s Teamster employees are covered by Central States.
Asked about the likelihood of a work stoppage if the payment isn’t made, Yellow declined further comment.
Yellow and the Teamsters remain at odds over proposed operational changes, which the carrier maintains are required for its survival.
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