Neff Begins Pre-Arranged Chapter 11 Reorganization

May 20, 2010
Miami-based Neff Rental has begun a prearranged reorganization under Chapter 11, the company announced this week. The bankruptcy protection was entered to de-leverage the company’s balance sheet and eliminate more than $400 million of debt.

Miami-based Neff Rental has begun a prearranged reorganization under Chapter 11, the company announced this week. The bankruptcy protection was entered to de-leverage the company’s balance sheet and eliminate more than $400 million of debt.

The company has filed a pre-arranged Chapter 11 plan and obtained full commitments from its existing revolving lenders to provide a $175 million debtor-in-possession and exit financing, and has secured support from other key stakeholders, including its largest first-lien term loan lenders.

The restructuring is backed by certain funds managed by Wayzata Investment Partners and Apollo Capital Management, which hold more than 67 percent of the aggregate principal amount of the company’s first-lien term loan. The companies agreed to vote in favor of Neff’s pre-arranged plan, exchange their first-lien term loans for equity and have committed to an investment of up to $119 million of new equity to recapitalize the company’s business and provide for future capital needs. The plan is subject to higher and better offers that may allow for additional recovery to the company’s creditors, Neff officials said.

According to court documents Neff Rental lists assets in the range of $100 to $500 million and estimated liabilities of $500 million to $1 billion.

"The filing of the company's Chapter 11 Plan culminates the process that the company undertook several months ago to reduce debt and puts the company on sound long-term financial footing," said CEO Graham Hood. "The restructuring will provide liquidity for ongoing business needs and allow Neff to make significant investments in its rental equipment fleet."

Neff’s management team and employees will continue to operate the business normally throughout the restructuring. The company said that the combination of cash flows from operations, and the $175 million in committed financing provides stability and ample liquidity to fund daily operations without interruption, including payments to vendors and to meet all customer and employee obligations.

Neff expects to complete the pre-arranged restructuring in the short term. It has hired AlixPartners LLP, Kirkland & Ellis LLP and Miller Buckfire & Co. to assist in the restructuring efforts. The company has set up a restructuring website at www.kccllc.net/neff where a copy of the plan can be read.

With a lot of its business based in Florida and other southeast and southwest states that have been hard hit by the recession, Neff had a difficult year in 2009, with rental volumes declining 31 percent to $154 million, compared with $225 million in 2008. Total revenues dropped from $277 million in 2008 to $192 million in 2009.

Neff Rental is No. 16 on the RER 100 and has 63 branches.