Summary
United Rentals, Inc. (URI) announced on March 31, 2015, the entry into a Second Amended and Restated Credit Agreement, establishing a new senior secured asset-based loan (ABL) facility totaling $2.5 billion. This facility, which replaces a previous one, includes an option for an incremental increase of up to $1.25 billion or 80% of the net orderly liquidation value of assets exceeding the initial borrowing base. The new ABL facility matures on March 31, 2020, and provides significant borrowing capacity with approximately $2.34 billion available at closing, after a $138 million CAD draw and accounting for outstanding letters of credit. The credit agreement involves various United Rentals entities as borrowers and guarantors, with Bank of America, N.A. and other financial institutions as lenders. The obligations are secured by a first-priority lien on substantially all tangible and intangible assets of the U.S. borrowers, U.S. guarantors, and certain Canadian subsidiaries. Importantly, the facility does not include financial covenants, except for a springing fixed charge coverage ratio that is tested only when availability falls below 10% of the maximum revolver amount, indicating flexibility for the company's operations.
Key Highlights
- 1United Rentals entered into a new Second Amended and Restated Credit Agreement on March 31, 2015.
- 2The agreement establishes a $2.5 billion senior secured asset-based loan (ABL) facility.
- 3There is an option for an incremental increase of up to $1.25 billion in the ABL facility.
- 4The ABL facility matures on March 31, 2020.
- 5Approximately $2.34 billion was available for additional borrowings at closing.
- 6The facility is secured by a first-priority lien on substantially all assets of U.S. borrowers, U.S. guarantors, and certain Canadian subsidiaries.
- 7The credit agreement does not contain ongoing financial covenants, only a springing fixed charge coverage ratio.