01—Abstract
Summary
Summary of the 8-K filed August 30, 2016. Cited figures are marked; the original filing is the authoritative source.
United Rentals, Inc. (URI) filed an 8-K report on August 30, 2016, detailing a significant amendment to its existing receivables financing facility.
The amendment, which extends the facility's expiration date to August 29, 2017, with potential for further 364-day extensions, aims to provide continued access to funding through the securitization of its receivables. Key to investors is that this amendment solidifies URI's short-term liquidity and operational funding. While the advances are classified as debt and reflected on the balance sheet, the underlying receivables are the sole source of repayment.
The amendment also introduces Fairway Finance Company, LLC as a new purchaser and BMO as its agent, signifying ongoing relationships within its financing partners and a commitment to maintaining its financial structure. Investors should note that the facility is subject to standard termination events, including changes in control and financial covenant breaches, which are important risk factors to monitor.
02—Key points
Key Highlights
- Extended the expiration date of a key receivables securitization facility to August 29, 2017, with options for further 364-day extensions.
- Introduced Fairway Finance Company, LLC as a new purchaser and Bank of Montreal (BMO) as its Purchaser Agent.
- The amendment pertains to the Third Amended and Restated Receivables Purchase Agreement and the Third Amended and Restated Purchase and Contribution Agreement.
- Advances under the amended facility will continue to be recorded as debt on the balance sheet, with associated receivables as assets.
- The facility's structure ensures that receivables in the collateral pool are the exclusive source of repayment for lenders.
- Standard termination events, such as change of control or covenant breaches, remain applicable to the facility.
- The Company reaffirmed its performance undertaking originally established in 2005.
03—Questions
Frequently Asked Questions
What is the primary purpose of the amendment to the receivables purchase agreement?
The primary purpose of the amendment is to extend the maturity date of the receivables securitization facility to August 29, 2017, and to add Fairway Finance Company, LLC as a new purchaser, ensuring continued access to funding through the securitization of United Rentals' receivables.
How does this amendment impact United Rentals' balance sheet and debt?
Advances made under the amended facility will continue to be reflected as debt on United Rentals' condensed consolidated balance sheets. The receivables included in the collateral pool will be reflected as assets on the consolidated balance sheets.
What are the key conditions or risks associated with this financing facility?
The facility is subject to standard termination events, which include a change of control of the Company or United Rentals (North America), Inc., failure to make payments, breaches of covenants related to defaults, delinquencies, dilution, days sales outstanding, or violations of financial ratio covenants under the Company's credit facility.
Who are the main parties involved in this amended agreement?
The main parties include United Rentals, Inc., United Rentals (North America), Inc. (as Originator), United Rentals Receivables LLC II (as Seller), and various purchasers and agents including Liberty Street Funding LLC, Gotham Funding Corporation, Fairway Finance Company, LLC, The Bank of Nova Scotia, PNC Bank, National Association, SunTrust Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, and Bank of Montreal.
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