- VANCOUVER, Wash. (CBS.MW)
-- The nation's No. 3 long-distance freight hauler, Consolidated Freightways,
said Monday it would file for Chapter 11 bankruptcy protection, shut down
some of its operations and lay off more than 15,000 workers.
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- The company's CF AirFreight and Canadian Freightways
subsidiaries are still operating and their employees will not be affected,
Consolidated said.
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- About 80 percent of the employees to be laid off will
receive termination notices immediately, the company said , and it will
discontinue some operations effective Monday.
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- Consolidated said it plans to file for bankruptcy protection
on Tuesday. It expects to file its Form 10-Q for the period ending June
30, 2002 at the same time.
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- In letters to be mailed to each employee tomorrow, the
company said it had "been vigorously exploring ways to restore the
financial health of the company. We expected that recent discussions with
our banks, other lenders and real estate investors would enable us to obtain
significant additional financial resources and that, together with the
combined efforts of employees, we would be successful in our restructuring
efforts.
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- "Unfortunately, this has not been the case. Nor
do we have the current resources necessary to sustain the business without
additional financial resources."
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- John Brincko, CEO of the company, said in remarks to
employees that despite the severe restrictions imposed on the credit, insurance
and real estate markets since the events of September 11, "and in
my very short three months here, I was hopeful that, with the right moves
at all the right times, we could be successful in turning the company around."
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- Brincko said that until recently, the company hoped it
could secure additional financing. However, he said that when one of the
company's surety bondholders cancelled coverage related to the company's
self-insurance programs for worker's compensation and vehicular casualty,
it hurt discussions with all lenders and investors. Ultimately, the company
said, it was unable to secure financing and to bridge the surety bond gap,
at which point the situation became critical. Moreover, the company anticipated
that a second insurer would also cancel coverage.
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- "Without the availability of further financing,
the board of directors reluctantly concluded that the company simply could
not continue to operate, pay employees and meet its obligations,"
Brincko said.
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- CF's fleet includes more than 38,000 tractors, trailers,
and other vehicles, and it has about 350 terminals in North America, according
to Hoover's Online. In addition to operations in Canada, Mexico, and the
U.S., Consolidated provides freight services between the U.S. and more
than 80 other countries through alliances with ocean carriers and international
partners. CF also provides supply chain management and logistics services
and Internet-based air and ocean freight forwarding to 180 countries.
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- Shares of Consolidated dropped 4 cents on Friday to end
at 71 cents.
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- Anne Stanley is a news editor at CBS.MarketWatch.com
in San Francisco.
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