The U.S. government is the proud new owner of a trucking company.
The Treasury Department took a 39.6% equity stake in YRC Worldwide ( ) in exchange for a $700 million CARES Act loan.
YRC provides transportation and logistical services for the U.S. military, and the Treasury Department issued the loan after deciding the firm is essential to national security.
- Job saver. Treasury Department officials say the loan will save 30,000 jobs, protect essential military supply lines, and ensure service for more than 200,000 businesses.
- CARES Bears. The Coronavirus Aid, Relief, and Economic Security (CARES) Act set aside $17 billion for loans to national security businesses, like YRC.
Here’s the goofy part: YRC was only $70 million (as of Tuesday’s close). The government also sued YRC for ripping them off back in 2018.
How does it affect my wallet?
It’s yours. US taxpayers will end up owning 30% of the company’s stock as part of the loan agreement.
YRC investors were very reassured by Uncle Sam’s intervention because the company’s stock skyrocketed after the news broke. It’s unclear how government ownership will impact the company’s long-term direction, but traders are betting that its safe from bankruptcy for now.
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