Summary
United Rentals, Inc. (URI) filed an 8-K on June 12, 2008, detailing significant financial transactions. The company entered into a new $1.25 billion senior secured asset-based revolving credit facility, replacing its previous credit lines. This new facility matures in five years and is secured by eligible rental equipment and inventory, with covenants that restrict certain corporate actions like incurring additional debt or making restricted payments. Concurrently, the company repurchased all outstanding Series C and D Preferred Stock from Apollo and J.P. Morgan Partners for approximately $678.7 million. A portion of this repurchase was financed by issuing $425 million in 14% Senior Notes due 2014. These transactions represent a substantial refinancing and restructuring effort by United Rentals. The new credit facility provides significant liquidity, while the senior notes add to the company's long-term debt. The repurchase of preferred stock and the concurrent announcement of a modified Dutch auction tender offer for common stock indicate a strategic move to alter the company's capital structure and potentially return capital to shareholders.
Key Highlights
- 1Entered into a new five-year, $1.25 billion senior secured asset-based revolving credit facility (ABL Facility), replacing prior credit agreements.
- 2The ABL Facility is secured by eligible rental equipment and inventory and includes customary covenants and financial tests.
- 3Repurchased all outstanding Series C and Series D Preferred Stock from Apollo and J.P. Morgan Partners for approximately $678.7 million.
- 4Issued $425 million of 14% Senior Notes due 2014 as part of the financing for the preferred stock repurchase.
- 5Announced plans to commence a modified Dutch auction tender offer to repurchase up to 27,160,000 shares of common stock.
- 6Two directors designated by the preferred stock resigned from the Board of Directors.
- 7Expects a one-time charge of approximately $235 million related to the preferred stock repurchase, plus a $7 million charge for foreign tax credits.