Economy

The plan would put Yellow back on the road with thousands of unionized drivers, but would force the government to wait longer for a loan repayment.When Yellow abruptly shuttered its operations in the summer and filed for bankruptcy protection, few thought that a buyer would emerge and try to revive the long-troubled trucking giant.Now a prominent trucking executive has assembled a last-minute plan to acquire Yellow out of bankruptcy — a proposal that seeks not only to rehire many of the company’s employees but also to work with their union, the International Brotherhood of Teamsters, to create a healthy business.The plan rests on getting the Treasury Department to allow Yellow to postpone repayment of a $700 million rescue loan that it made to the company in 2020. The Treasury may not accept the plan because there are legal obstacles to extending the loan. And it stands to be repaid sooner under the plan that Yellow has already filed in the Delaware bankruptcy court, which involves selling the company’s terminals and other assets to raise hundreds of millions of dollars in cash. Some trucking analysts say reviving Yellow will be hard because many customers will have moved on to other trucking companies that are much better run than the old Yellow.But Sarah Riggs Amico, the trucking executive leading the deal, said only her plan could bring back thousands of jobs, adding that she had the experience to build a leaner company in partnership with the Teamsters and assemble an executive team that can win back customers.“Restructuring Yellow provides an opportunity to bring back tens of thousands of fair-wage, union truck-driving jobs while bolstering America’s supply chain,” said Ms. Riggs Amico, the executive chairwoman of Jack Cooper, a private auto-hauling trucking company. “Who wouldn’t find that a worthy effort?”Under the proposal, Ms. Riggs Amico’s group would extend the Treasury loan so that it would be repaid in 2026 instead of next year, according to a person familiar with the bid. The group would also borrow $1.1 billion to pay off other secured creditors and bankruptcy lenders, and provide the new company with cash to operate. And it would issue $1.5 billion of preferred shares to unsecured creditors — the biggest of which is the Central States Pension Fund — that don’t get all their claims paid in bankruptcy. The Central States fund would get some $500 million of the preferred shares, according to the plan, far less than the $4.8 billion that Yellow owes it.Ms. Riggs Amico’s bid will be submitted to the bankruptcy court on Tuesday, when an auction to sell Yellow’s assets will take place.Ms. Riggs Amico and other female executives would own 51 percent of the new company, which would be separate from Jack Cooper. The new Yellow plans to employ some 15,000 people, according to the person familiar with the plan, down from 30,000 earlier this year.“The Teamsters have a framework agreement to lay the foundation for good union jobs, fair wages and strong benefits once a new company is in place,” Kara Deniz, a Teamsters spokeswoman, said in a statement.Government labor market data suggest that roughly 10,000 Yellow employees have found jobs elsewhere, said Avery Vise, vice president of trucking at FTR, a forecasting firm that focuses on the freight industry.That implies that some 20,000 Yellow employees are still looking for work. “I have a lot of friends that are still without jobs,” said Mark Roper, a former Yellow driver from McDonough, Ga., who found a job at another trucking company. “I have a lot of friends that are on the verge of losing their house.”Sarah Riggs Amico, the trucking executive leading a bid for Yellow, ran in a U.S. Senate primary in 2020.Alyssa Pointer/Atlanta Journal-Constitution, via Associated PressThough bringing back lost trucking jobs and resurrecting a unionized company may appear attractive goals to the labor-friendly Biden administration, the Treasury may not believe it has the legal authority to extend the loan — it was made under the CARES Act, passed to provide relief early in the pandemic — and it may have qualms about further backing a company that struggled for years.“There is no clear authority for Treasury to compromise the claim in any way that does not maximize returns for the U.S. government,” said Adam Levitin, a law professor at Georgetown University who specializes in bankruptcy.In a statement, a Treasury spokesperson said: “Treasury is one of several creditors taking part in the bankruptcy process. We will continue to work to ensure taxpayers, and impacted workers and their families are treated fairly.”Thomas Nyhan, the executive director of the Central States Pension Fund, said on Sunday that the fund was trying to determine the financial benefit of each plan as the terms of the rescue bid changed. And he said there may be a legal obstacle: The Employee Retirement Income Security Act generally prevents a pension fund from owning securities issued by companies contributing to the fund — the preferred stock under the Yellow rescue plan — though there can be exemptions. “This is a very complicated problem,” Mr. Nyhan said. “We haven’t come to a conclusion, mainly because the deal keeps evolving.”Members of Congress from both parties have written to the Treasury, urging it to consider extending its loan, including Senators Josh Hawley, Republican of Missouri, and Elizabeth Warren, Democrat of Massachusetts. Mr. Hawley wrote this month that assisting the sale of Yellow to an acquirer was “a common-sense step to keep Yellow’s trucks on the road, and keep its work force gainfully employed.”The Treasury’s loan came from a pot of money to help companies designated as crucial to national security. It drew scrutiny because of the links between Yellow and the Trump administration, and because the Justice Department had sued the company, accusing it of overcharging the Department of Defense for freight services. Yellow last year agreed to pay a $7 million fine to resolve the case.Yellow was a big player — another is Old Dominion — in the less-than-truckload sector, in which a truck will carry goods for more than one customer. Companies in the sector often have a network of terminals and warehouses to store goods between shipments and typically travel shorter distances than truckload companies, whose vehicles carry goods for one customer over longer distances.Analysts say Yellow underperformed because it failed to effectively integrate big acquisitions and because it had higher costs, which some attribute in part to the unionization of its work force.Ms. Riggs Amico, a Democratic primary candidate in Georgia for the U.S. Senate in 2020, has experience restructuring Teamster trucking companies. She oversaw Jack Cooper’s acquisition of two auto-hauling trucking companies with Teamster work forces, and her plan for Yellow envisions hiring executives who specialize in the less-than-truckload business. (Jack Cooper, whose employees belong to the Teamsters, itself filed for bankruptcy in 2019.)Some of Yellow’s rivals are interested in snapping up its terminals under the current plan in Delaware bankruptcy court. Estes Express has submitted a stalking horse bid — an offer intended to set a minimum price for assets — of $1.53 billion for Yellow’s shipment centers. That sum would provide enough cash to pay off the Treasury and a secured loan of around $500 million now held by Citadel, a Wall Street firm. Ms. Riggs Amico’s plan would pay off Citadel but ask the Treasury to extend its loan. Some experts say this would mean taxpayers were taking a back seat to Wall Street.“It’s helping private parties make money off of a distressed-debt investment, and there’s no real reason for Treasury to do that,” Mr. Levitin, the Georgetown professor, said.Citadel declined to comment.In Congress, those open to Ms. Riggs Amico’s bid acknowledge that other creditors would be getting ahead of Treasury but think the compromise a necessary evil to save jobs.But it is not clear whether there would be much room left for a resurrected Yellow. Trucking experts say the market is gradually coping with the loss of the company, which once accounted for roughly 12 percent of drivers in the less-than-truckload sector. Mr. Vise, the trucking analyst, said Yellow’s exit had pushed trucking rates higher as customers scrambled to find other carriers. But he expects the sector to heal soon.“Yellow’s shutdown did not seriously disrupt the less-than-truckload market,” he said. More

ATHENS (Reuters) – Greece will next month repay ahead of schedule 5.3 billion euros ($5.8 billion) of loans owed to euro zone countries under its first bailout, and hopes to repeat the move in 2024, finance ministry officials told Reuters on Tuesday.The euro zone and the International Monetary Fund (IMF) together lent Greece more than 260 billion euros during its decade-long debt crisis which began in late 2009, in exchange for tough austerity measures. The country’s third bailout expired in 2018. “On Dec. 15, we will repay earlier than expected 5.3 billion euros to euro zone countries,” an official who spoke on condition of anonymity told Reuters, adding that the payment refers to loans maturing in 2024 and 2025.Greece recently regained its investment grade credit rating after languishing for 13 years in the “junk” category. Last year, it paid off the IMF, which provided it with 28 billion euros between 2010 and 2014 – two years ahead of schedule. It also repaid early 2.7 billion euros to euro zone partners as part of efforts to improve its debt sustainability, and hopes to continue on the same path in 2024.”We might repay earlier more bilateral loans next year,” a second official told Reuters, without giving more details on the amount or the timing.Euro zone countries lent Greece 53 billion euros in bilateral so-called Greek Loan Facility (GLF) loans during its first bailout, with maturities extending to 2041. With the planned payment this year, Greece will have repaid a total of about 13 billion euros.Since emerging from bailouts in 2018, Greece has relied solely on bond markets to cover its borrowing needs. It plans to borrow about 7 billion euros next year.It has a liquidity buffer of more than 35 billion euros due to higher than expected tax revenues, strong growth and primary surpluses.Greece sees economic growth at 2.9% in 2024 following a 2.4% expansion this year, more than twice the eurozone average. It also hopes to achieve a 2.1% of GDP primary budget surplus next year on higher investment and strong tourism revenue. ($1 = 0.9168 euros) More

BERLIN (Reuters) -Chancellor Olaf Scholz on Tuesday sought to reassure the German people and businesses that his government would modernise the economy and support vital industries like chip factories, despite a court ruling that tore a hole in the federal budget. Speaking to parliament, Scholz went into Germany’s recent history of the COVID pandemic, the war in Ukraine and soaring energy prices to extend a suspension of self-imposed borrowing limits to tackle a crisis that has knocked his coalition. A constitutional court ruling nearly two weeks ago blocked the government’s plans to reallocate unused pandemic funds towards green initiatives and industry support, raising fears Germany’s economy could be further weakened.The verdict also called into question Germany’s traditionally strict fiscal policy and sparked warnings that companies could be starved of support to keep them globally competitive against subsidies offered elsewhere. “It would be a grave and unforgivable mistake to neglect the modernisation of our country in the face of all these acute challenges,” Scholz told the Bundestag in a 25-minute speech. The country’s federal states had the greatest interest in securing investment in areas like semiconductors, climate-friendly steel production and battery plants, he said, addressing concerns of specific industries who fear losing out.Scholz said the government would end a scheme to cap energy prices by the end of this year but promised to act quickly if prices shot up again.However, he left open the question of whether the government would try to suspend Germany’s constitutionally enshrined debt brakes again in 2024, which some in his coalition have called for but the opposition might challenge in court.SPENDING CURBS AN OPTIONScholz said his government was working with parliament to draw up a 2024 budget “as quickly as possible” that could include spending curbs.Scholz’s assurances that his government would solve the budget crisis with care were met with jeers and laughter from the opposition Christian Democrats (CDU), whose lawsuit against the government had sparked the earlier court ruling. “I don’t know how to interpret your laughing there,” said Scholz, who in English invoked the song “You’ll Never Walk Alone” to reassure Germans of the government’s support through difficult times. He underscored support for Ukraine, after the recent budget turmoil raised questions over how much military aid Berlin was willing to commit. Scholz’s government has pledged to double support to 8 billion euros ($8.76 billion) next year. “It is also clear that we must not let up in our support for Ukraine and in overcoming the energy crisis. That would not be responsible, that would endanger our future,” he said. ‘ROLE MODEL’ CDU leader Friedrich Merz accused Scholz’s government of a brazen attempt to circumvent borrowing rules and said its behaviour risked undermining the European Union’s wider fiscal reforms in upcoming negotiations. “If the dams burst in Germany, they will also not hold in all other countries in the currency union,” Merz said. “Germany has a function as a role model there and you need to realise that, whether you like it or not.”Germany has by far the lowest debt in the G7 grouping of major economies, but memories of how frugality paved the way for postwar reconstruction and how costly it was to re-integrate indebted ex-communist East Germany have shaped a uniquely debt-averse political culture.In order to keep supporting industry, Finance Minister Christian Lindner has ruled out tax rises and said savings would have to be found elsewhere, backed up by welfare reforms.The debt brake, introduced after the global financial crisis of 2008-2009, was first suspended in 2020 to help the government support firms and health systems during the COVID pandemic. ($1 = 0.9134 euros) More

The current inflation rate, at 4.6%, has fallen to less than half of last year’s figures, largely due to decreasing energy prices. However, with a grim economic forecast and the threat of a recession on the horizon, Ramsden emphasized the necessity of continued tight monetary policy to achieve the Bank’s inflation target of 2%.Adding to the complexity of the economic landscape are the recent tax cuts introduced by Chancellor Jeremy Hunt in the Autumn Statement. These cuts, aimed at stimulating the economy, have sparked debate over their potential to exacerbate inflation, which the Bank must now consider. With the Conservative Party gearing up for next year’s election, the timing of these fiscal measures has been particularly scrutinized.The implications of the Chancellor’s stimulus tax cuts will be a significant point of discussion at the Bank of England’s December Monetary Policy Committee meeting. The outcome of this meeting will be closely watched by markets and policymakers alike, as decisions made will influence the UK’s economic path amid challenging global conditions.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

Today, Hoyer reaffirmed the EIB’s commitment to Ukraine, backing its efforts to rebuild amidst the ongoing conflict with Russia. The EIB has extended two loan agreements totaling €450 million as part of the EU4U program, which will focus on restoring critical infrastructure and enhancing economic stability. This funding is part of the larger “EU for Ukraine” initiative, supported by €500 million in contributions from EU member states and European Commission guarantees.In addition to today’s announcements, Prime Minister Denis Shmygal met with Hoyer on Monday to discuss Ukraine’s reconstruction efforts and celebrate the inauguration of the new EIB office for Eastern Europe. Shmygal commended the EIB for its significant contributions to Ukraine’s post-crisis recovery, which includes over €7.5 billion (EUR1 = USD1.0956) in aid since March 2022. This assistance has been instrumental in rebuilding vital infrastructure, modernizing energy and heating systems, and supporting municipal projects across the country.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

COPENHAGEN (Reuters) – Denmark’s central bank said on Tuesday that the risk of further price drops in the commercial property market could be accelerated by Swedish real estate firms selling out of their Danish portfolios, which could hurt banks.Swedish property firms struggling to refinance their debt amid rising interest rates have begun selling their portfolios, which could have a spillover effect on the Danish property market by pushing down prices, the central bank said.”Due to the low level of transactions, a price correction related to divestment by the Swedish firms at this point in time would have a relatively great effect,” the central bank said in a financial stability report on Tuesday, adding that the largest Swedish firms have properties in Denmark worth 99 billion Danish crowns ($14.5 billion).Any heavy divestment by Swedish firms would come amid a sharp drop in the number of commercial real estate deals in Denmark this year, which according to the central bank indicates that prices have not yet adjusted to the new interest rate level.The central bank warned that as commercial real estate prices fall, the collateral pledged by property firms for loans may not be sufficient to cover their full exposure to banks. “This may lead to losses for the institutions in the case of default of the loans,” the bank said.Lending by Danish credit institutions to real estate firms has increased in recent years, amounting to 537 billion crowns or around 38% of their exposure to companies.The central bank also said Danish real estate firms do not face the same refinancing risks as their Swedish counterparts, because they mostly are financed by mortgage loans with long maturities. ($1 = 6.8090 Danish crowns) More

The eurozone has seen a significant drop in inflation, with rates falling from a high of 10.6% to 2.9% in October. This decrease has led to market expectations of interest rate cuts as early as April. However, Nagel’s comments suggest that the ECB is likely to maintain its current pause on rate hikes at the upcoming December meeting, after concluding its recent series of increases.The caution expressed by Nagel comes at a time when the eurozone is grappling with economic challenges triggered by the tightening of monetary policy. The region’s Gross Domestic Product (GDP) saw a decline in the third quarter, and negative business sentiment has raised concerns about a looming recession. Despite these challenges, there is a glimmer of hope as projections indicate the possibility of the economy narrowly avoiding a downturn, showing signs of minimal growth or stabilization.Nagel anticipates that the path for inflation rates will be volatile moving forward, underscoring the uncertainty surrounding the eurozone’s economic outlook. The ECB’s stance in the coming months will be closely watched as policymakers balance the need to control inflation with the risks associated with an economic slowdown.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

LONDON (Reuters) -The International Monetary Fund is “very keen” to support Argentina and the country could be a candidate to receive financing through its Resilience and Sustainability Trust (RST), the Fund’s chief Kristalina Georgieva said. Georgieva is expected to meet Argentina’s President-elect Javier Milei in person during his visit to Washington on Tuesday. This follows a first virtual meeting between Milei and the Fund on Friday, which Georgieva described as a “very constructive engagement, very serious discussion”.”Let’s see how the engagement goes – but good promising first step,” Georgieva told Reuters in an interview late Monday.”The most important way Argentina can help itself is by addressing the macroeconomic imbalances that have accumulated. But then again, we are very keen to support Argentina, address the deep problem of inflation, create an environment for private sector-led growth that can perk up employment and the economy overall.”Far-right libertarian Milei will also meet with a top security aide to U.S. President Joe Biden in Washington, the White House confirmed on Monday, after a lunch with former U.S. President Bill Clinton in New York.Milei secured a stronger-than-expected election win and on Dec. 10 is set to take the helm of South America’s second largest economy, which is engulfed in an severe crisis that has seen inflation soar above 140% and net reserves sink deep into the red.Georgieva said she was interested to discuss how Argentina could become be less vulnerable to climate events. “They have very significant structural problems that the fund can support them to address, as well as very significant adaptation issues,” such as a drought.Countries wanting to borrow from the Fund’s RST vehicle, launched in 2022 to help vulnerable middle-income and island countries, are expected to fulfil a number of preconditions – including having an IMF progamme of which there should be at least 18 months remaining as well as sustainable debt and adequate capacity to repay. It was unclear how Argentina possibly tapping into the RST would be affected by its $44 billion IMF programme – the Fund’s largest – having veered off track and running out in September 2024.The IMF said in late September it had received total pledges amounting to 31.2 billion special drawing rights – an international reserve currency backed by dollars, euros, yen, sterling and yuan – from 18 members since the inception of the RST, which provides access to low-interest loans to about 140 nations. More