Summary
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.
Key Highlights
- 1Extended the expiration date of a key receivables securitization facility to August 29, 2017, with options for further 364-day extensions.
- 2Introduced Fairway Finance Company, LLC as a new purchaser and Bank of Montreal (BMO) as its Purchaser Agent.
- 3The amendment pertains to the Third Amended and Restated Receivables Purchase Agreement and the Third Amended and Restated Purchase and Contribution Agreement.
- 4Advances under the amended facility will continue to be recorded as debt on the balance sheet, with associated receivables as assets.
- 5The facility's structure ensures that receivables in the collateral pool are the exclusive source of repayment for lenders.
- 6Standard termination events, such as change of control or covenant breaches, remain applicable to the facility.
- 7The Company reaffirmed its performance undertaking originally established in 2005.