YRC, which has pushed back the deadline for the swap three times this month, must complete the tender by Dec. 31 to avoid a $19 million payment of interest and fees that would leave the trucker in an "unsustainable" position, the Overland Park, Kansas-based company said yesterday in a regulatory filing. . .
Holdouts to the debt exchange include investors that bought credit-default swaps to hedge their holdings and typically would get paid whether the company defaults or not, said the people, who declined to be identified because the discussions aren't public.
Goldman Sachs Group Inc. was creating derivatives trades that would profit from a bankruptcy, Teamsters President James Hoffa wrote in a Dec. 16 letter to Lloyd Blankfein, chief executive officer of the New York-based bank.
Wall Street's most profitable firm was "actively soliciting bond trades for clients and underwriting credit- default swaps to benefit from a failed exchange and resulting bankruptcy," Hoffa wrote in the letter obtained by Bloomberg News.
Goldman Sachs spokesman Michael DuVally confirmed the bank received the letter and said in an interview yesterday that the firm was "actively exploring ways to help" YRC. He declined to elaborate on how the bank is helping.
"Goldman does not have a position in the company, nor are we making markets in the company's bonds or credit-default swaps," DuVally said Dec. 16.
Goldman Sachs sent e-mails to debt investors at around 11 a.m. that day in New York, offering pricing levels on YRC bonds and credit-default swaps and saying that $25 million of the bonds and swaps were "trading here," according to people familiar with the matter.
Credit-default swaps are financial instruments based on bonds and loans that are used to hedge against losses or to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.